Exhibit 1.1
EXECUTION COPY
5,400,000 Shares
5.75% Series C Cumulative Convertible Preferred Shares of Beneficial Interest
(Liquidation Preference $25.00 Per Share)
ENTERTAINMENT PROPERTIES TRUST
December 19, 2006
Bear, Stearns & Co. Inc.,
as Representative to the several Underwriters
c/o Bear, Stearns & Co. Inc.
383 Madison Avenue
New York, New York 10179
Ladies/Gentlemen:
Entertainment Properties Trust, a Maryland real estate investment trust (the
Company
), proposes, subject to the terms and conditions stated herein, to issue and sell
to Bear, Stearns & Co. Inc. (
Bear Stearns
) and each of the several underwriters named in
Schedule I
hereto (collectively, the
Underwriters
, which term shall also include
any underwriter substituted as hereinafter provided in Section 12 hereof) for which Bear Stearns is
acting as representative (in such capacity, the
Representative
) an aggregate of 5,400,000
(the
Firm Shares
) of its 5.75% Series C Cumulative Convertible Preferred Shares of
Beneficial Interest, par value $.01 per share (liquidation preference $25.00 per share) (the
Series C Preferred Shares
), as set forth on
Schedule I
hereto, and, for the sole
purpose of covering over-allotments in connection with the sale of the Firm Shares, at the option
of the Underwriters, up to an additional 600,000 Series C Preferred Shares (the
Additional
Shares
). The Series C Preferred Shares shall be convertible into common shares of beneficial
interest, par value $0.01 per share, of the Company (the Conversion Shares). The Firm Shares and
any Additional Shares purchased by the Underwriter are referred to herein as the
Shares
..
The dividend payment dates, conversion terms, redemption provisions, rank and other terms of the
Series C Preferred Shares are set forth in the Articles Supplementary relating to the Series C
Preferred Shares (the
Articles Supplementary
) to be filed with the State Department of
Assessments and Taxation of the State of Maryland (the
SDAT
). The Representative is
acting as sole book-running and co-lead manager in connection with the public offering of the
Shares that the Underwriters intend to conduct (the
Offering
).
1.
Representations and Warranties of the Company
. The Company represents and warrants
to, and agrees with, each of the Underwriters as of the date hereof, as of
the Applicable Time (as defined below), as of the Closing Date (as defined below) and, if
applicable, as of the time of any Additional Closing Date (as defined below) that:
(a) The Company has filed with the Securities and Exchange Commission (the
Commission
) a registration statement on Form S-3 (No. 333-113626), as amended, for the
registration of common shares, preferred shares, warrants and debt securities, including the
Shares, under the Securities Act of 1933, as amended (the
Securities Act
), and the
offering thereof from time to time in accordance with Rule 430A or Rule 415 of the rules and
regulations of the Commission under the Securities Act (the
Securities Act Rules and
Regulations
), and the Company has filed such post-effective amendments thereto as may be
required prior to the execution of this Agreement. Such registration statement (as so amended, if
applicable) has been declared effective by the Commission. The registration statement and
prospectus may have been amended or supplemented prior to the date of this Agreement; any such
amendment or supplement was prepared and filed, and any such amendment, filed after the effective
date of such registration statement has been declared effective. No stop order suspending the
effectiveness of the registration statement has been issued, and no proceeding for that purpose has
been instituted or threatened by the Commission. A prospectus supplement (the
Prospectus
Supplement
) to the base prospectus included as part of the registration statement setting
forth the terms of the offering, sale and plan of distribution of the Shares and additional
information concerning the Company and its business has been or will be prepared and, together with
the prospectus included in the registration statement, will be filed pursuant to Rule 424(b) of the
Rules and Regulations on or before the second business day after the date hereof (or such earlier
time as may be required by the Rules and Regulations). The registration statement, as it may have
heretofore been amended at the time it became effective, including the information, if any, deemed
to be a part thereof pursuant to Rule 430A(b) of the Securities Act Rules and Regulations or Rule
434(d) of the Securities Act Rules and Regulations, is referred to herein as the
Registration
Statement
. The final form of prospectus included in the Registration Statement, as
supplemented by the Prospectus Supplement, in the form filed by the Company with the Commission
pursuant to Rule 424(b) under the Securities Act Rules and Regulations, is referred to herein as
the
Prospectus
. Any Registration Statement filed by the Company pursuant to Rule 462(b)
of the Securities Act is hereinafter called the
Rule 462(b) Registration Statement
and
from and after the date and time of filing the Rule 462(b) Registration Statement, the term
Registration Statement shall include the Rule 462(b) Registration Statement. Copies of the
Registration Statement and the Prospectus, any amendments or supplements thereto and all documents
incorporated by reference therein that were filed with the Commission on or prior to the date of
this Agreement (including one fully executed copy of the Registration Statement and of each
amendment thereto) have been delivered to the Underwriters and their counsel. Any preliminary
Prospectus Supplement relating to the offering of the Shares (a
Preliminary Prospectus
Supplement
), preliminary prospectus or prospectus subject to completion included in the
Registration Statement or filed with the Commission pursuant to Rule 424 under the Securities Act
and the Securities Act Rules and Regulations is hereafter called a
Preliminary
Prospectus
.
Issuer Free Writing Prospectus
means any issuer free writing
prospectus, as defined in Rule 433 of the Securities Act Rules and Regulations, relating to the
Shares in the form filed or required to be filed with the Commission or, if not required to be
filed, in the form
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retained in the Companys records pursuant to Rule 433(g) of the Securities Act Rules and
Regulations.
General Use Issuer Free Writing Prospectus
means any Issuer Free Writing
Prospectus that is intended for general distribution to prospective investors, as evidenced by its
being specified as such in
Schedule II
to this Agreement.
Limited Use Issuer Free
Writing Prospectus
means any Issuer Free Writing Prospectus that is not a General Use Issuer
Free Writing Prospectus (including the electronic roadshow of the Company posted on netroadshow.com
on December 18, 2006).
Applicable Time
means 6:15 P.M. (Eastern time) on the date of
this Agreement or such other date and time agreed to by the Company and the Underwriter. Any
reference herein to the Registration Statement, any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 which were filed under the Securities Exchange Act of 1934, as amended (the
Exchange Act
), on or before the effective date of the Registration Statement, the date of
such Preliminary Prospectus or the date of the Prospectus, as the case may be, and any reference
herein to the terms
amend
,
amendment
or
supplement
with respect to
the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include (i) the filing of any document under the Exchange Act after the effective date of
the Registration Statement, the date of such Preliminary Prospectus or the date of the Prospectus,
as the case may be, which is incorporated therein by reference and (ii) any such document so filed.
For purposes of this Agreement, all references to the Registration Statement, the Prospectus,
Prospectus Supplement, Preliminary Prospectus Supplement, Preliminary Prospectus or Issuer Free
Writing Prospectus or to any amendment or supplement thereto shall be deemed to include any copy
filed with the Electronic Data Gathering Analysis and Retrieval System (EDGAR), and such copy shall
be identical in content to any Prospectus delivered to the Underwriters for use in connection with
the Offering.
(b) Each part of the Registration Statement, when such part became or becomes effective, at
the date of the filing of the Companys most recent Annual Report on Form 10-K, at the Closing Date
(as hereinafter defined) and, if later, at any Additional Closing Date (as hereinafter defined),
and the Prospectus and any amendment or supplement thereto, on the date of filing thereof with the
Commission, at the Closing Date and at any Additional Closing Date, conformed or will conform in
all material respects with the requirements of the Securities Act and the Securities Act Rules and
Regulations; each part of the Registration Statement, when such part became or becomes effective,
or when such part was or is filed with the Commission, or at the date of the filing of the
Companys most recent Annual Report on Form 10-K, did not or will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; the Prospectus and any amendment or supplement thereto,
on the date of the filing thereof with the Commission, at the Closing Date and, if later, at any
Additional Closing Date, did not or will not include an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. When any related Preliminary Prospectus was first
filed with the Commission (whether filed as part of the registration statement for the registration
of the Shares or any amendment thereto or pursuant to Rule 424(a) under the Securities Act) and
when any amendment thereof or supplement thereto was first filed with the Commission, such
Preliminary Prospectus and any
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amendments thereof and supplements thereto complied in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the Rules and Regulations and did
not contain an untrue statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. No representation and warranty is made
in this subsection (b) however, with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or any related Preliminary Prospectus or any amendment
thereof or supplement thereto in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of the Underwriters through you specifically for use
therein. The parties acknowledge and agree that such information provided by or on behalf of the
Underwriters through you consists solely of the fourth and fifth sentences of paragraph 8, and the
last two sentences of paragraph 15, under the caption Underwriting in the Prospectus Supplement.
The Company has not distributed, and prior to the later of the Closing Date and the completion of
the distribution of the Shares, will not distribute, any offering material in connection with the
offering or sale of the Shares other than the Registration Statement, the Preliminary Prospectus
Supplement, the Prospectus or any other materials, if any, permitted by the Securities Act (which
were disclosed to the Underwriter and Underwriters Counsel and are listed on
Schedule I
hereof other than documents referred to in clause (C) of Section 1(d)).
(c) At the time of filing the Registration Statement and at the date of this Agreement, the
Company was not and is not an ineligible issuer, as defined in Rule 405 of the Securities Act
Rules and Regulations, including as a result of (x) the Company or any subsidiary of the Company in
the preceding three years having been convicted of a felony or misdemeanor or having been made the
subject of a judicial or administrative decree or order as described in Rule 405 of the Securities
Act Rules and Regulations and (y) the Company in the preceding three years having been the subject
of a bankruptcy petition or insolvency or similar proceeding, having had a registration statement
be the subject of a proceeding under Section 8 of the Securities Act or being the subject of a
proceeding under Section 8A of the Securities Act in connection with the offering of the Shares,
all as described in Rule 405 of the Securities Act Rules and Regulations.
(d) As of the Applicable Time, neither (i) (A) the General Use Issuer Free Writing
Prospectus(es) issued at or prior to the Applicable Time, (B) the Preliminary Prospectus and (C)
the documents mutually agreed to by the Company and the Underwriter, considered together
(collectively, the
General Disclosure Package
), nor (ii) any individual Limited Use
Issuer Free Writing Prospectus, when considered together with the General Disclosure Package,
included any untrue statement of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under which they were made,
not misleading. The preceding sentence does not apply to statements contained in or omitted from
any prospectus included in the Registration Statement or any Issuer Free Writing Prospectus in
reliance upon and in conformity with information furnished in writing to the Company by or on
behalf of the Underwriters through you specifically for use therein. The parties acknowledge and
agree that such information provided by or on
4
behalf of the Underwriters through you consists solely of the material included in paragraphs
the fourth and fifth sentences of paragraph 8, and the last two sentences of paragraph 15, under
the caption Underwriting in the Prospectus Supplement.
(e) Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Shares or until any earlier date that
the Company notified or notifies the Underwriter as described in the next sentence, did not, does
not and will not include any information that conflicted, conflicts or will conflict with the
information then contained in the Registration Statement or the Prospectus. If at any time
following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or
development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict
with the information then contained in the Registration Statement or included or would include an
untrue statement of a material fact or omitted or would omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances prevailing at that
subsequent time, not misleading, (i) the Company has promptly notified or will promptly notify the
Underwriter and (ii) the Company has promptly amended or will promptly amend or supplement such
Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.
The foregoing two sentences do not apply to statements contained in or omitted from any Issuer Free
Writing Prospectus in reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of the Underwriters through you specifically for use therein. The parties
acknowledge and agree that such information provided by or on behalf of the Underwriters through
you consists solely of the fourth and fifth sentences of paragraph 8, and the last two sentences of
paragraph 15, under the caption Underwriting in the Prospectus Supplement.
(f) The documents incorporated or deemed to be incorporated by reference in the Registration
Statement, the Preliminary Prospectus and the Prospectus, at the time they became or become
effective or were or hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the Securities Act and the Exchange Act and the rules
and regulations of the Commission under the Exchange Act (the
Exchange Act Rules and
Regulations
and, together with the Securities Act Rules and Regulations, the
Rules and
Regulations
) and, when read together with the other information in the Preliminary Prospectus
and the Prospectus, at the time the Registration Statement and any amendments thereto become
effective, at the Applicable Time, at the date of the Prospectus and at the Closing Date and any
Additional Closing Date, did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
(g) Ernst & Young LLP, who have certified certain of the financial statements and supporting
schedules and information incorporated by reference in the Registration Statement are and, during
the periods covered by their reports incorporated by reference in the Registration Statement, were
independent public accountants as required by the Securities Act, the Exchange Act and the Rules
and Regulations. KPMG LLP, which has
5
certified certain of the financial statements and supporting schedules and information
incorporated by reference in the Registration Statement is and, during the periods covered by their
reports incorporated by reference in the Registration Statement, was an independent registered
public accounting firm as required by the Securities Act, the Exchange Act, the Rules and
Regulations and the PCAOB, except to the extent that registration with the PCAOB was not required
thereunder during an applicable period, in which case KPMG LLP consisted of independent public
accountants as required by the Securities Act, the Exchange Act and the Rules and Regulations then
in effect. Neither Ernst & Young LLP nor KPMG LLP has notified the Company, the Companys board of
trustees or the audit committee of the board of trustees of any illegal acts that are required to
be reported pursuant to Section 10A of the Exchange Act.
(h) Subsequent to the respective dates as of which information is given in the Registration
Statement, the General Disclosure Package (including as of the Applicable Time) and the Prospectus,
except as set forth in the Registration Statement, the General Disclosure Package and the
Prospectus, (A) there has been no change in the earnings, assets, properties, business, results of
operations, shareholders equity, prospects, affairs or condition (financial or otherwise) of the
Company and each subsidiary of the Company listed on
Exhibit A
hereto (the
Subsidiaries
), taken as a whole, which has had or would reasonably be expected to have a
Material Adverse Effect (as defined in Section 1(m) below), (B) there has been no casualty, loss,
condemnation or other adverse event with respect to any property or interest therein owned,
directly or indirectly, by the Company or any Subsidiary which has had or would reasonably be
expected to have a Material Adverse Effect, (C) there have been no transactions entered into by the
Company or any Subsidiary, other than those in the ordinary course of business, which are material
with respect to the Company and the Subsidiaries taken as a whole, (D) except for regular quarterly
distributions on the Common Shares, 9.50% Series A Cumulative Redeemable Preferred Shares of
Beneficial Interest, par value $.01 per share (liquidation preference $25.00 per share) (the
Series A Preferred Shares
) and 7.75% Series B Cumulative Redeemable Preferred Shares of
Beneficial Interest, par value $.01 per share (liquidation preference $25.00 per share) (the
Series B Preferred Shares
), which have been publicly announced through the date of this
Agreement, there has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its shares of beneficial interest, and (E) there has been no material
increase in long-term debt or decrease in the capital of the Company or the Subsidiaries, taken as
a whole, other than in the ordinary course of their businesses (each, a
Material Adverse
Change
). Since the date of the latest balance sheet presented in the Registration Statement,
Preliminary Prospectus and the Prospectus, neither the Company nor any of the Subsidiaries has
incurred or undertaken any liabilities or obligations, direct or contingent, or entered into any
transactions which are material to the Company and the Subsidiaries, taken as a whole, except for
liabilities, obligations and transactions which are reflected in the Registration Statement, the
General Disclosure Package and the Prospectus.
(i) This Agreement and the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus have been duly and validly authorized by the Company and this
Agreement has been duly and validly executed and delivered by the
6
Company. The Articles Supplementary has been, or by the Closing Date will be, duly authorized
and executed by the Company and filed by the Company with the SDAT.
(j) The execution, delivery, and performance of this Agreement and the Articles Supplementary
and the consummation of the transactions contemplated by this Agreement, the Articles
Supplementary, the Registration Statement and the Prospectus (including the issuance and sale of
the Shares, the issuance of any Conversion Shares, and the use of proceeds from the sale of the
Shares as described under the caption Use of Proceeds) do not and will not (i) conflict with,
require consent under or result in a breach of any of the terms and provisions of, or constitute a
Repayment Event (as defined below) or default (or an event which with notice or lapse of time, or
both, would constitute a Repayment Event or default) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other
agreement, instrument, franchise, license or permit to which the Company or any of the Subsidiaries
is a party or by which the Company or any of the Subsidiaries or their respective properties,
operations or assets may be bound or (ii) violate or conflict with any provision of the declaration
of trust, certificate or articles of incorporation, by-laws, certificate of formation, limited
liability company agreement, partnership agreement or any other organizational document of the
Company or any of the Subsidiaries or any judgment, decree, order, statute, rule or regulation of
any court or any public, governmental or regulatory agency or body, domestic or foreign, having
jurisdiction over the Company or any of the Subsidiaries or any of their respective properties,
operations or assets. As used herein,
Repayment Event
means any event or condition that
gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on
such holders behalf) the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any Subsidiary. No consent, approval,
authorization, order, registration, filing, qualification, license or permit of or with any court
or any public, governmental or regulatory agency or body, domestic or foreign, having jurisdiction
over the Company or any of the Subsidiaries or any of their respective properties, operations or
assets, or any third party, is required for the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus, including the issuance, sale and delivery of the Shares to be issued,
sold and delivered hereunder, the issuance of any Conversion Shares, and compliance with the
provisions of the Articles Supplementary, except the registration under the Securities Act of the
Shares, filings with the New York Stock Exchange and the Commission of the Prospectus, and such
consents, approvals, authorizations, orders, registrations, filings, qualifications, licenses and
permits as may be required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters, each of which has been obtained.
(k) The authorized, issued and outstanding shares of beneficial interest of the Company is as
set forth in the General Disclosure Package and the Prospectus in the column entitled Actual
under the caption Capitalization and, after giving effect to the Offering and the other
transactions contemplated by this Agreement, the Registration Statement and the Prospectus, will be
as set forth in the column entitled As Adjusted under the caption
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Capitalization. All of the issued and outstanding shares of beneficial interest of the
Company have been duly and validly authorized and issued, are fully paid and non-assessable and
were not issued in violation of or subject to any preemptive or similar rights arising by operation
of law under the organizational documents of the Company or under any agreement to which the
Company or any of its subsidiaries is a party or otherwise that entitle or will entitle any person
to acquire from the Company or any Subsidiary upon the issuance or sale thereof any Common Shares,
Series A Preferred Shares, Series B Preferred Shares, any other equity security of the Company or
any Subsidiaries and any security convertible into, or exercisable or exchangeable for, any Common
Shares, Series A Preferred Shares, Series B Preferred Shares or other such equity security (any
Relevant Security
). The Shares to be delivered on the Closing Date and the Additional
Closing Date, if any (as hereinafter respectively defined), have been duly and validly authorized
for issuance and sale pursuant to this Agreement and, when delivered in accordance with this
Agreement against payment of the consideration therefor specified in this Agreement, will be duly
and validly issued, fully paid and non-assessable, and will not have been issued in violation of or
subject to any preemptive or similar rights that entitle or will entitle any person to acquire any
Relevant Security from the Company or any Subsidiary upon issuance or sale of Shares in the
Offering. The Conversion Shares have been duly and validly authorized and reserved for issuance by
the Company and, when issued and delivered upon conversion and in accordance with the Articles
Supplementary, will be duly and validly issued, fully paid and non-assessable, and will not have
been issued in violation of or subject to any preemptive or similar rights that entitle or will
entitle any person to acquire any Relevant Security from the Company or any Subsidiary. The Common
Shares, Series A Preferred Shares and Series B Preferred Shares conform in all material respects to
the descriptions thereof contained in the Registration Statement, the General Disclosure Package
and the Prospectus, and such description conforms to the rights set forth in the instruments
defining the same. The Firm Shares and the Additional Shares conform to the provisions of the
Articles Supplementary and the relative rights, preferences, interests and powers of such Firm
Shares and Additional Shares are as set forth in the Articles Supplementary. The Firm Shares, the
Additional Shares and the Conversion Shares conform in all material respects to the descriptions
thereof contained in the Registration Statement, the General Disclosure Package and the Prospectus.
The forms of share certificate to be used to evidence the Shares and the Conversion Shares will be
in due and proper form and will comply with all applicable legal requirements. Except as disclosed
in or specifically contemplated by the General Disclosure Package and the Prospectus, there are no
shares of beneficial interest of the Company reserved for any purpose and there are no outstanding
securities convertible into or exchangeable for any shares of beneficial interest of the Company
and neither the Company nor any Subsidiary has outstanding options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, or any contracts or commitments to issue or
sell, any Relevant Security. The holders of the Shares or the Conversion Shares will not be
subject to liability by reason of being such holders.
(l) The Subsidiaries listed on
Exhibit A
hereto are the only subsidiaries of the
Company within the meaning of Rule 405 under the Securities Act. Except for the Subsidiaries and
Atlantic-EPR I, a Delaware general partnership (in which the Company owns a 20% interest),
Atlantic-EPR II, a Delaware general partnership (in which the Company
8
owns a 20% interest) and New Roc Associates L.P., a New York limited partnership (in which the
Company owns the general partnership interest and 70.4% of the limited partnership interest), the
Company owns no ownership or other beneficial interest, directly or indirectly, in any corporation,
partnership, joint venture or other business entity. All of the issued shares of capital stock of
or other ownership interest in each of the Subsidiaries have been duly and validly authorized and
issued and are fully paid and non-assessable and, except as set forth on
Exhibit A
hereto,
are owned directly or indirectly by the Company free and clear of all liens, encumbrances, equities
or claims.
(m) Each of the Company and the Subsidiaries has been duly organized and validly exists as a
real estate investment trust, corporation, business trust, partnership or limited liability company
in good standing under the laws of its jurisdiction of organization. Each of the Company and the
Subsidiaries is duly qualified to do business and is in good standing as a foreign trust,
corporation, partnership or limited liability company in each jurisdiction in which the character
or location of its properties (owned, leased or licensed) or the nature or conduct of its business
makes such qualification necessary, except for those failures to be so qualified or in good
standing which could not reasonably be expected to (individually or when aggregated with other such
instances) have a material adverse effect on (i) the earnings, assets, business, condition
(financial or otherwise), results of operations, shareholders equity, properties, affairs or
prospects of the Company and the Subsidiaries, taken as a whole; (ii) the long-term debt, shares of
beneficial interst or capital stock of the Company or any of its Subsidiaries; or (iii) the
Offering or consummation of any of the other transactions contemplated by this Agreement, the
Registration Statement and the Prospectus (a
Material Adverse Effect
). Each of the
Company and the Subsidiaries has all requisite power and authority, and all necessary consents,
approvals, authorizations, orders, registrations, qualifications, licenses and permits
(collectively, the
Consents
) of and from all public, regulatory or governmental agencies
and bodies and third parties, foreign and domestic, to own, hold, lease and operate its properties
and conduct its business as it is now being conducted and as described in the Registration
Statement, the General Disclosure Package and the Prospectus, and each such Consent is valid and in
full force and effect, and neither the Company nor any of the Subsidiaries has received notice of
any investigation or proceedings which could result in the revocation of any such Consent. Each of
the Company and the Subsidiaries is in compliance with all applicable laws, rules, regulations,
ordinances and directives, except where failure to be in compliance could not reasonably be
expected to have a Material Adverse Effect. No Consent contains a materially burdensome
restriction not adequately disclosed in the Registration Statement, the General Disclosure Package
and the Prospectus. Neither the Company nor any Subsidiary is in violation of its declaration of
trust, certificate or articles of incorporation, by-laws, certificate of formation, limited
liability company agreement, partnership agreement or any other organizational document. The
Company and Subsidiaries are not in default (or with notice or lapse of time, or both, would be in
default) under any indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or evidence of indebtedness, lease, contract or other agreement or
instrument to which they are a party or by which they or any of their properties or other assets
are bound, violation of which would individually or in the aggregate have a Material Adverse
Effect, and no other party under any
9
such agreement or instrument to which the Company or the Subsidiaries are a party is, to the
knowledge of the Company, in default (or with notice or lapse of time, or both, would be in
default) in any material respect thereunder. To the knowledge of the Company, no liability
(financial or otherwise) exists for the Company or the Subsidiaries, except for those liabilities
which would not have a Material Adverse Effect.
(n) Except as described in the General Disclosure Package and the Prospectus, there is no
legal, governmental or regulatory proceeding or other litigation (including but not limited to
routine litigation) to which the Company or any of the Subsidiaries or any of their respective
officers or trustees/directors is a party or of which any property or operations of the Company or
any of the Subsidiaries is the subject which, individually or in the aggregate, if determined
adversely to the Company or any of the Subsidiaries (or any of their respective officers or
trustees/directors), could reasonably be expected to have a Material Adverse Effect; to the best of
the Companys knowledge, no such proceeding or litigation is threatened or contemplated by any
legal, governmental or regulatory authority or other third party, foreign or domestic; and the
defense of all such proceedings and litigation against or involving the Company or any of the
Subsidiaries (or any of their respective officers or trustees/directors) could not reasonably be
expected to have a Material Adverse Effect.
(o) The consolidated financial statements of the Company, included or incorporated by
reference, in the Registration Statement, the General Disclosure Package and the Prospectus,
together with the related schedules and notes, as well as those financial statements, schedules or
notes of any other entity included therein, present fairly the financial position as of the dates
indicated and the results of operations, changes in shareholders equity and cash flows for the
periods therein specified of the Company and its consolidated Subsidiaries or of the respective
entity or entities or group presented therein; except as otherwise stated in the Registration
Statement, the General Disclosure Package and the Prospectus, said financial statements, notes and
schedules have been prepared in conformity with generally accepted accounting principles
(
GAAP
) applied on a consistent basis throughout the periods involved and present fairly
the information required to be stated therein. The other financial and statistical information and
data included or incorporated by reference in the Registration Statement, the General Disclosure
Package and the Prospectus present fairly the information included therein and have been prepared
on a basis consistent with that of the financial statements that are included or incorporated by
reference in the Registration Statement, the General Disclosure Package and the Prospectus and the
books and records of the respective entities presented therein, and comply with the applicable
requirements of Regulation G of the Commission.
(p) Any pro forma or as adjusted financial information and the related notes thereto included
or incorporated by reference in the Registration Statement, the General Disclosure Package and the
Prospectus present fairly the information shown therein, have been prepared in accordance with the
Commissions rules and the guidelines of the American Institute of Certified Public Accountants
with respect to pro forma information and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are, in the opinion of the Company,
reasonable and the adjustments used therein are appropriate to
10
give effect to the transactions and circumstances referred to therein. All historical
financial statements and information and all pro forma financial statements and information
required by the Securities Act, the Exchange Act and the Rules and Regulations are included, or
incorporated by reference, in the Registration Statement, the General Disclosure Package and the
Prospectus.
(q) The statistical and market-related data included or incorporated by reference in the
Registration Statement, the General Disclosure Package and the Prospectus are based on or derived
from sources which the Company reasonably and in good faith believes are reliable and accurate, and
such data agree with the sources from which they are derived.
(r) There are no contracts or other documents (including, without limitation, any voting
agreement), which are required to be described in the Registration Statement, the General
Disclosure Package and the Prospectus or filed as exhibits to the Registration Statement by the
Securities Act, the Exchange Act or the Rules and Regulations and which have not been so described
or filed. All of the contracts to which any of the Company or the Subsidiaries is a party and
which are material to the business and operations of the Company and the Subsidiaries, taken as a
whole, (i) have been duly authorized, executed and delivered by such entity, constitute valid and
binding agreements of such entity and are enforceable against such entity in accordance with the
terms thereof, except as such enforcement may be limited by (A) bankruptcy, insolvency,
reorganization or similar other laws affecting creditors rights generally and (B) general equity
principles and limitations on the availability of equitable relief, or (ii) in the case of any
contract to be executed on or before the Closing Date, will on the Closing Date be duly authorized,
executed and delivered by the Company and/or a Subsidiary, and constitute valid and binding
agreements of such entity enforceable against each entity in accordance with the terms thereof,
except as such enforcement may be limited by (A) bankruptcy, insolvency, reorganization or similar
other laws affecting creditors rights generally and (B) general equity principles and limitations
on the availability of equitable relief.
(s) The Common Shares, Series A Preferred Shares and Series B Preferred Shares are registered
pursuant to Section 12(b) of the Exchange Act and the outstanding Common Shares, Series A Preferred
Shares and Series B Preferred Shares are listed on The New York Stock Exchange and the Company has
taken no action designed to, or likely to have the effect of, terminating the registration of the
Common Shares, Series A Preferred Shares or Series B Preferred Shares under the Exchange Act or
de-listing the Common Shares, Series A Preferred Shares or Series B Preferred Shares from The New
York Stock Exchange, nor has the Company received any notification that the Commission or The New
York Stock Exchange is contemplating terminating such registrations or listings. The Shares and
the Conversion Shares have been approved for listing on The New York Stock Exchange, subject to
official notice of issuance.
(t) Except as disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus, no holder of securities of the Company has any registration or similar rights to
require registration of any debt or equity security of the Company as part or on account of, or
otherwise in connection with, the sale of the Shares contemplated
11
hereby, and any such rights so disclosed have either been fully complied with by the Company
or effectively waived by the holders thereof, and any such waivers remain in full force and effect.
(u) Neither the Company nor any of its affiliates has taken, nor will any of them take,
directly or indirectly, any action resulting in a violation of Regulation M under the Exchange Act,
or that is designed to cause or result in, or which might reasonably be expected to constitute,
cause or result in, the stabilization or manipulation of the price of any security to facilitate
the sale or resale of the Shares.
(v) The Company has not prior to the date hereof offered or sold any securities which would be
integrated with the offer and sale of the Shares pursuant to the Registration Statement. Except
as described in the Registration Statement, the General Disclosure Package and the Prospectus (and
pursuant to the Companys dividend reinvestment plan, as in effect on the date hereof), the Company
has not sold or issued any Relevant Security during the six-month period preceding the date of the
Prospectus, including but not limited to any sales pursuant to Rule 144A or Regulation D or S under
the Securities Act, other than Common Shares issued pursuant to employee benefit plans, qualified
stock option plans or the employee compensation plans or pursuant to outstanding options, rights or
warrants as described in the General Disclosure Package and the Prospectus.
(w) There are no direct or indirect business relationships or related party transactions
(including those contemplated by Item 404 of Regulation S-K under the Securities Act) involving the
Company or any subsidiary or affiliate or any other person required by the Securities Act, the
Exchange Act, the Rules and Regulations or the rules and regulations of The New York Stock Exchange
or the NASD (as defined below) to be described in the Registration Statement, the General
Disclosure Package or the Prospectus which is not so described or is not described as required.
There are no outstanding loans, advances (except normal advances for business expenses in the
ordinary course of business) or guarantees of indebtedness by the Company to or for the benefit of
any of the officers, directors or trustees of the Company or its subsidiaries which are required to
by the Securities Act, the Exchange Act or the Rules and Regulations to be described in the
Registration Statement, the General Disclosure Package or the Prospectus which are not so described
or not described as required. Neither the Company nor any of its subsidiaries has, in violation of
the Sarbanes-Oxley Act of 2002 (the
Sarbanes-Oxley Act
), directly or indirectly, extended
or maintained credit, arranged for the extension of credit, or renewed an extension of credit, in
the form of a personal loan to or for any director, trustee or executive officer (or any family
member or affiliate thereof) of the Company or any Subsidiary.
(x) The Company and its Subsidiaries (i) make and keep accurate books and records, and (ii)
maintain a system of internal accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with managements general or specific authorizations,
(B) transactions are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain accountability for assets,
(C) access to assets is permitted only in
12
accordance with managements general or specific authorization and (D) the recorded accounting
for assets is compared with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 and 15d-14 under the Exchange Act) that (i) are
designed to ensure that material information relating to the Company and its Subsidiaries is made
known to the Companys Chief Executive Officer and its Chief Financial Officer, (ii) are effective
to perform the functions for which they were established, and (iii) have been evaluated for
effectiveness as of the end of the period covered by the Companys most recent Annual Report on
Form 10-K filed with the Commission. The principal executive officers (or their equivalents) and
principal financial officers (or their equivalents) of the Company have made all certifications
required by Sections 302 and 906 of the Sarbanes-Oxley Act and any related rules and regulations of
the Commission, and the statements contained in any such certification were correct when made.
Based on an evaluation of its disclosure controls and procedures, the Company is not aware of (i)
any significant deficiency in the design or operation of internal controls which could adversely
affect the Companys ability to record, process, summarize and report financial data or any
material weakness in internal controls; or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Companys internal controls.
Since the date of the most recent evaluation of such disclosure controls and procedures, there have
been no significant changes in internal controls or in other factors that could significantly
affect internal controls, including any corrective actions with regard to significant deficiencies
and material weaknesses.
(y) The conditions for use of Form S-3, as set forth in the General Instructions thereto, have
been satisfied. During the period of at least the last 24 calendar months prior to the date of
this Agreement, the Company has timely filed with the Commission all documents and other material
required to be filed pursuant to Sections 13, 14 and 15(d) under the Exchange Act. During the
period of at least the last 36 calendar months preceding the filing of the Registration Statement,
the Company has filed all reports required to be filed pursuant to Sections 13, 14 and 15(d) under
the Exchange Act. Immediately preceding the filing of the Registration Statement, the aggregate
market value of the Companys voting and non-voting common equity held by non-affiliates of the
Company was equal to or greater than $75 million.
(z) Each of the Company and the Subsidiaries is not and, at all times up to and including
consummation of the transactions contemplated by this Agreement, the Registration Statement and the
Prospectus, and after giving effect to the application of the net proceeds of the Offering, will
not be, subject to registration as an investment company under the Investment Company Act of
1940, as amended (the
40 Act
), and is not and will not be an entity controlled by an
investment company within the meaning of such act.
(aa) The Company and the Subsidiaries have good and marketable title in fee simple to, or a
valid and enforceable ground leasehold interest in, all real property and good and marketable title
to all personal property owned by them, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Registration Statement, the General Disclosure Package
and the Prospectus or such as do not (individually or in the
13
aggregate) materially affect the value of such property or interfere with the use made or
proposed to be made of such property by the Company and the Subsidiaries; and any real property and
buildings held under lease or sublease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and buildings by the Company
and the Subsidiaries. Neither the Company nor any of the Subsidiaries has received any notice of
any claim adverse to its ownership or leasing of any real or personal property or of any claim
against the continued possession of any real property, whether owned or held under lease or
sublease by the Company or any of the Subsidiaries. All liens, charges, encumbrances, claims or
restrictions on or affecting any of the properties or the assets of the Company and the
Subsidiaries which are required to be disclosed in the General Disclosure Package and the
Prospectus are disclosed therein. No tenant under any of the leases pursuant to which the Company
or any Subsidiary leases its property has an option or right of first refusal to purchase the
premises demised under such lease, the exercise of which would have a Material Adverse Effect. The
use and occupancy of each of the properties of the Company and the Subsidiaries comply in all
material respects with all applicable codes and zoning laws and regulations. The Company and the
Subsidiaries have no knowledge of any pending or threatened condemnation or zoning change that will
in any material respect affect the size of, use of, improvement of, construction on, or access to
any of the properties of the Company or the Subsidiaries. The Company and the Subsidiaries have no
knowledge of any pending or threatened proceeding or action that will in any manner materially
affect the size of, use of, improvements or construction on, or access to any of the properties of
the Company or the Subsidiaries. The property purchase agreements described in the General
Disclosure Package and the Prospectus have been duly authorized, executed and delivered by the
Company, have been executed by the other parties thereto, and constitute binding obligations of the
Company. The descriptions of the property purchase agreements contained in the General Disclosure
Package and the Prospectus are accurate in all material respects.
(bb) The Company and each of the Subsidiaries owns or possesses adequate right to use all
patents, patent applications, trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses, formulae, customer lists, and know-how and other
intellectual property (including trade secrets and other unpatented and/or unpatentable proprietary
or confidential information, systems or procedures) necessary for the conduct of their respective
businesses as being conducted and as described in the Registration Statement, the General
Disclosure Package and Prospectus and have no reason to believe that the conduct of their
respective businesses does or will conflict with, and have not received any notice of any claim of
conflict with, any such right of others. To the best of the Companys knowledge, all material
technical information developed by and belonging to the Company which has not been patented has
been kept confidential. Neither the Company nor any of its Subsidiaries has granted or assigned to
any other person or entity any right to manufacture, have manufactured, assemble or sell the
current products and services of the Company or those products and services described in the
Registration Statement, the General Disclosure Package and the Prospectus. There is no
infringement by third parties of any such Intellectual Property; there is no pending or, to the
Companys knowledge, threatened action, suit, proceeding or claim
14
by others challenging the Companys or any Subsidiarys rights in or to any such Intellectual
Property, and the Company is unaware of any facts which would form a reasonable basis for any such
claim; and there is no pending or, to the Companys knowledge, threatened action, suit, proceeding
or claim by others that the Company infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the Company is unaware of any
other fact which would form a reasonable basis for any such claim.
(cc) Each of the Company and the Subsidiaries has accurately prepared and timely filed all
federal, state and other tax returns that are required to be filed by it and has paid or made
provision for the payment of all taxes, assessments, governmental or other similar charges,
including without limitation, all sales and use taxes and all taxes which the Company and each of
the Subsidiaries is obligated to withhold from amounts owing to employees, creditors and third
parties, with respect to the periods covered by such tax returns (whether or not such amounts are
shown as due on any tax return). No deficiency assessment with respect to a proposed adjustment of
the Companys or any of the Subsidiaries Federal, state, or other taxes is pending or, to the best
of the Companys knowledge, threatened. There is no tax lien, whether imposed by any federal,
state or other taxing authority, outstanding against the assets, properties or business of the
Company or any of the Subsidiaries. To the knowledge of the Company, there are no tax returns of
the Company or any of the Subsidiaries that are currently being audited by state, local or Federal
taxing authorities or agencies which would have a Material Adverse Effect.
(dd) Neither the Company, any of the Subsidiaries nor, to the Companys knowledge, any of its
employees or agents has at any time during the last five years (i) made, on behalf of the Company,
any unlawful contribution to any candidate for foreign office, or failed to disclose fully any
contribution in violation of law or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States of any jurisdiction thereof.
(ee) No labor disturbance by the employees of the Company or any of the Subsidiaries exists
or, to the best of the Companys knowledge, is imminent and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its or any Subsidiarys principal
suppliers, manufacturers, customers or contractors, which, in either case, could reasonably be
expected to have a Material Adverse Effect.
(ff) No prohibited transaction (as defined in Section 406 of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published interpretations
thereunder (
ERISA
), or Section 4975 of the Internal Revenue Code of 1986, as amended from
time to time (the
Code
), or accumulated funding deficiency (as defined in Section 302
of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice requirement under Section 4043 of ERISA has been waived) has
occurred with respect to any employee benefit plan which could reasonably be expected to have a
Material Adverse Effect; each employee benefit plan is in
15
compliance in all material respects with applicable law; including ERISA (to the extent
applicable) and the Code; the Company has not incurred and does not expect to incur liability under
Title IV of ERISA with respect to the termination of, or withdrawal from any pension plan; and
each pension plan (as defined in ERISA) for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all material respects
and nothing has occurred, whether by action or by failure to act, which could cause the loss of
such qualification.
(gg) Except as would not, singularly or in the aggregate, have a Material Adverse Effect, (i)
to the Companys knowledge, there does not exist on any of the properties described in the General
Disclosure Package and the Prospectus any Hazardous Materials (as hereinafter defined) in unlawful
quantities, (ii) to the Companys knowledge, there has not occurred on or from such properties any
unlawful spills, releases, discharges or disposal of Hazardous Materials, (iii) the Company and the
Subsidiaries have not failed to comply with all applicable local, state and Federal laws,
regulations, ordinances and administrative and judicial orders relating to pollution or protection
of human health, the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of Hazardous Materials or to the
generation, manufacture, processing, recycling, distribution, use, treatment, sale, storage,
disposal, transport or handling of Hazardous Materials (collectively,
Environmental
Laws
), (iv) the Company and its Subsidiaries have (to the extent not maintained by the
applicable tenants) all permits, authorizations and approvals required under any applicable
Environmental Laws and all are in compliance with their requirements, (v) there are no pending or,
to the Companys knowledge, threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or
proceedings pursuant to any Environmental Law against the Company or any of its Subsidiaries, and
(vi) to the Companys knowledge, there are no events or circumstances that might reasonably be
expected to form the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against the Company, any Subsidiary
or any of their assets relating to any Hazardous Materials or the violation of any Environmental
Laws.
As used herein,
Hazardous Material
shall include, without limitation, any flammable
explosives, radioactive materials, oil, petroleum, petroleum products, hazardous materials,
hazardous wastes, hazardous or toxic substances, asbestos or any material as defined by any
environmental laws, including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.) (CERCLA), the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801, et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Section 6901, et seq.), and in the regulations
adopted pursuant to each of the foregoing or by any Federal, state or local governmental authority
having jurisdiction over the properties as described in the Prospectus.
16
All of the properties of the Company and the Subsidiaries have been, and it is contemplated
that all future acquisitions will be, subjected to a Phase I or similar environmental assessment
(which generally includes a site inspection, interviews and a records review, but no subsurface
sampling). These assessments and follow-up investigations, if any, of the properties (including,
as appropriate, asbestos, radon and lead surveys, additional public record review, subsurface
sampling and other testing), of the properties have not revealed any environmental liability that
the Company believes would have a Material Adverse Effect. The Company has not agreed to assume,
undertake or provide indemnification (except as may extend to lenders to the Company who finance
the acquisition of real property or the refinancing thereof) for any liability of any other person
under any environmental law, including any obligation for cleanup or remedial action, except as
could not reasonably be expected to have a Material Adverse Effect.
(hh) Commencing with the Companys taxable year ended December 31, 1997, the Company has been,
and upon the sale of the Shares will continue to be, organized and operated in conformity with the
requirements for qualification and taxation as a real estate investment trust (a
REIT
)
under Sections 856 through 860 of the Code. The proposed method of operation of the Company as
described in the General Disclosure Package and the Prospectus will enable the Company to continue
to operate in a manner which would permit it to qualify as a REIT under the Code. The Company has
no present intention of changing its operations or engaging in activities which would cause it to
fail to qualify, or make economically undesirable its continued qualification, as a REIT.
(ii) Title insurance in favor of the Company and the Subsidiaries is maintained with respect
to each of the properties described in the General Disclosure Package and the Prospectus in an
amount at least equal to the cost of acquisition of such property.
(jj) Except as disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus and any amendment or supplement thereto, there are no mortgages or deeds of trust
encumbering any of the properties described in the General Disclosure Package and the Prospectus.
The mortgages encumbering the properties are not convertible into any equity securities of the
Company, nor does the Company or any of the Subsidiaries hold a participating interest therein and,
except as disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus and any amendment or supplement thereto, such mortgages are not cross defaulted to or
cross-collateralized by any party other than the Company and the Subsidiaries.
(kk) The Company has and maintains, or its tenants have and maintain, property and casualty
insurance in favor of the Company and the Subsidiaries with respect to such entities and each of
the properties owned, directly or indirectly, by the Company, in an amount and on such terms as is
reasonable and customary for the businesses of the type proposed to be conducted by the Company and
the Subsidiaries. Neither the Company nor any of the Subsidiaries has received from any insurance
company written notice of any material defects or deficiencies affecting the insurability of any
such properties.
17
(ll) Except as otherwise disclosed in or incorporated by reference in the Prospectus, there
are no material outstanding loans or advances or material guarantees of indebtedness by the Company
or any of the Subsidiaries to or for the benefit of any of the officers, trustees or directors of
the Company or any of the Subsidiaries or any of the members of the families of any of them.
(mm) To the knowledge of the Company, each of the properties described in the General
Disclosure Package and the Prospectus is in compliance with all presently applicable provisions of
the Americans with Disabilities Act, except for any failures to comply which would not, singly or
in the aggregate, result in a Material Adverse Effect.
(nn) The Company has not incurred any liability for any finders fees or similar payments in
connection with the transactions herein contemplated except as may otherwise exist with respect to
the Underwriters pursuant to this Agreement.
(oo) No person who is a trustee of the Company or is an officer of the Company, and to the
Companys knowledge, no person who in the aggregate beneficially owns 5% or more of the Companys
Common Shares (a
Beneficial Owner
), is a member of the National Association of Securities
Dealers, Inc. (
NASD
), a controlling stockholder of a member, or an affiliate of a member,
or of an underwriter or related person of a member or underwriter, in each case with respect to any
proposed offering under this Agreement. No beneficial owner of the Companys unregistered
securities acquired within the 12 months prior to the filing of the Registration Statement, or any
amendments thereto, or to the filing of the General Disclosure Package, the Prospectus, or any
amendment or supplement thereto, has any direct or indirect affiliation or association with any
NASD member.
(pp) The Company is in compliance with all presently applicable provisions of the
Sarbanes-Oxley Act and the rules and regulations promulgated thereunder and is actively taking
steps to ensure that it will be in compliance with other applicable provisions of the
Sarbanes-Oxley Act upon the effectiveness of such provisions.
Any certificate signed by or on behalf of the Company and delivered to the Underwriters or to
counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
2.
Purchase, Sale and Delivery of the Shares
.
(a) On the basis of the representations, warranties, covenants and agreements herein
contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to
each Underwriter severally and not jointly, and each Underwriter severally and not jointly agrees
to purchase from the Company, at a purchase price per share of $24.25, the number of Firm Shares
set forth in
Schedule I
opposite the name of such Underwriter, plus any additional number
of Firm Shares which such Underwriter may become obligated to purchase pursuant to the provisions
of Section 9 hereof.
18
(b) Payment of the purchase price for, and delivery of certificates representing, the Firm
Shares shall be made at the office of Dechert LLP, 30 Rockefeller Plaza, New York, New York 10112
(
Underwriters Counsel
), or at such other place as shall be agreed upon by the
Representative and the Company, at 10:00 A.M., New York City time, on the fourth business day (as
permitted under Rule 15c6-1 under the Exchange Act) (unless postponed in accordance with the
provisions of Section 12 hereof) following the effective date of this Agreement or such other time
not later than ten business days after such date as shall be agreed upon by the Representative and
the Company (such time and date of payment and delivery being herein called the
Closing
Date
). It is understood that each Underwriter has authorized the Representative, for its own
account, to accept delivery of, receipt for, and make payment of the purchase price for the Firm
Shares and the Additional Shares, if any, which it has agreed to purchase.
Payment of the purchase price for the Firm Shares shall be made by wire transfer in same day
funds to the Company at the bank account designated in writing by the Company at least one business
day prior to the Closing Date, upon delivery of the Firm Shares to the Representative through the
facilities of The Depository Trust Company for the respective accounts of the several Underwriters.
Certificates for the Firm Shares, if any, shall be registered in such name or names and shall be
in such denominations as the Representative may request at least two business days before the
Closing Date. The Company will permit the Representative to examine and package such certificates
for delivery at least one full business day prior to the Closing Date.
(c) In addition, on the basis of the representations, warranties, covenants and agreements
herein contained, but subject to the terms and conditions herein set forth, the Company hereby
grants to the Underwriters, severally and not jointly, the option to purchase up to 600,000
Additional Shares at the same purchase price per share to be paid by the Underwriters for the Firm
Shares as set forth in this Section 2, for the sole purpose of covering over-allotments in the sale
of Firm Shares by the Underwriters. This option may be exercised at any time and from time to
time, in whole or in part on one or more occasions, on or before the thirtieth day following the
date of the Prospectus Supplement, by written notice by the Representative to the Company. Such
notice shall set forth the aggregate number of Additional Shares as to which the option is being
exercised and the date and time, as reasonably determined by the Representative, when the
Additional Shares are to be delivered (any such date and time being herein sometimes referred to as
the
Additional Closing Date
);
provided
,
however
, that the Additional
Closing Date shall not be earlier than the Closing Date nor later than the eighth full business day
after the date on which the option shall have been exercised. If the option is exercised as to all
or any portion of the Additional Shares, each of the Underwriters, acting severally and not
jointly, will purchase its share of the total number of Additional Shares then being purchased
proportionate to its share of the Firm Shares set forth in
Schedule I
opposite the name of
such Underwriter, subject in each case to such adjustments as the Representative in its sole
discretion shall make to eliminate any sales or purchases of fractional shares.
19
(d) Payment of the purchase price for, and delivery of certificates representing, the
Additional Shares, if any, shall be made at the office of Underwriters Counsel, or at such other
place as shall be agreed upon by the Representative and the Company, at 10:00 A.M., New York City
time, on the Additional Closing Date, or such other time as shall be agreed upon by the
Representative and the Company.
Payment of the purchase price for the Additional Shares shall be made by wire transfer in same
day funds to the Company at the bank account designated in writing by the Company at least one
business day prior to the Additional Closing Date upon delivery of certificates for the Additional
Shares to the Representative through the facilities of The Depository Trust Company for the
respective accounts of the Underwriters. The Additional Shares shall be registered in such name or
names and shall be in such denominations as the Representative may request at least two business
days before the Additional Closing Date. The Company will permit the Representative to examine and
package such certificates for delivery at least one full business day prior to the Additional
Closing Date.
3.
Offering
. Upon authorization of the release of the Firm Shares by the
Representative, the Underwriters propose to offer the Shares for sale to the public upon the terms
and conditions set forth in the General Disclosure Package and the Prospectus Supplement.
4.
Covenants of the Company
. The Company covenants and agrees with the Underwriters
that:
(a) The Company will cause the Prospectus (including any Preliminary Prospectus Supplement and
Prospectus Supplement) to be prepared and filed as required by Section 1(a) hereof (but only if the
Underwriters or Underwriters Counsel have not reasonably objected thereto by notice to the Company
after having been furnished a copy a reasonable time prior to filing) and will notify the
Underwriters promptly of such filing. The Company will prepare a final term sheet (the
Final
Term Sheet
) reflecting the final terms of the Shares, in form and substance satisfactory to
the Underwriters, and shall file such Final Term Sheet as an issuer free writing prospectus
pursuant to Rule 433 as soon as practicable following the execution of this Agreement;
provided
that the Company shall furnish the Underwriters with copies of any such Final Term
Sheet a reasonable amount of time prior to such proposed filing and will not use or file any such
document to which the Underwriter or Underwriters counsel shall object.
(b) During the period (beginning on the Applicable Time) in which a prospectus relating to the
Shares is required to be delivered under the Securities Act or such date which is 90 days after the
Closing Date, whichever is later, the Company will notify the Underwriters promptly of the time
when any subsequent amendment to the Registration Statement has become effective or any Preliminary
Prospectus Supplement or Prospectus Supplement or other amendment or supplement to the Prospectus
or any Issuer Free Writing Prospectus has been filed, or of any request by the Commission for any
amendment or supplement to the Registration Statement, the Preliminary Prospectus Supplement or the
Prospectus or for additional information. The Company will prepare and file with the
20
Commission, promptly upon the Underwriters request, any amendments or supplements to the
Registration Statement, the General Disclosure Package or the Prospectus that, in the Underwriters
opinion, may be necessary or advisable in connection with the Underwriters distribution of the
Shares; and the Company will file no Issuer Free Writing Prospectus or any amendment or supplement
to the Registration Statement, the General Disclosure Package or the Prospectus (other than any
prospectus supplement relating to the offering of other securities registered under the
Registration Statement or any document required to be filed under the Exchange Act that upon filing
is deemed to be incorporated by reference therein) to which the Representative or Underwriters
counsel shall reasonably object by notice to the Company after having been furnished a copy a
reasonable time prior to the filing.
(c) The Company will advise the Underwriters, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement, of the suspension of the qualification or registration of the Shares
for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for
any such purpose; and it will promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such a stop order should be issued.
(d) The Company shall comply with the Securities Act, the Exchange Act and the Rules and
Regulations to permit completion of the distribution as contemplated in this Agreement, the
Registration Statement, the General Disclosure Package and the Prospectus. If at any time when a
prospectus relating to the Shares is required to be delivered under the Securities Act or the
Exchange Act in connection with the sales of Shares, any event shall have occurred or condition
shall exist as a result of which it is necessary, in the reasonable opinion of counsel for the
Underwriters or for the Company, to amend the Registration Statement in order that the Registration
Statement will not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading, to amend
or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements therein
not misleading in the light of the circumstances existing at the time it is delivered to a
purchaser or to amend or supplement the General Disclosure Package in order that the General
Disclosure Package will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading in the light of the
circumstances, or if it shall be necessary, in the reasonable opinion of such counsel, at any such
time to amend the Registration Statement or amend or supplement the Prospectus or the General
Disclosure Package in order to comply with the requirements of the Securities Act, Exchange Act or
the Rules and Regulations, the Company will promptly notify the Underwriters and prepare and file
with the Commission (to the extent required by applicable law), subject to Sections 4(a) and (b),
such amendment or supplement (in form and substance reasonably satisfactory to counsel for the
Underwriters) as may be necessary to correct such statement or omission or to make the Registration
Statement, the Prospectus or the General Disclosure Package comply with such requirements. The
Company will use its best efforts to have any amendment to the Registration Statement be declared
effective as soon as possible, and the
21
Company will furnish to the Underwriters and counsel for the Underwriters, without charge,
such number of copies of such amendment or supplement as the Underwriters may reasonably request.
(e) The Company will promptly deliver to each of you and Underwriters Counsel a signed copy
of the Registration Statement, as initially filed and all amendments thereto, including all
consents and exhibits filed therewith, and will maintain in the Companys files manually signed
copies of such documents for at least five years after the date of filing. The Company will
promptly deliver to each Underwriter such number of copies of any Preliminary Prospectus,
Preliminary Prospectus Supplement, the Prospectus Supplement, the Prospectus, the Registration
Statement, and all amendments of and supplements to such documents, if any, and all documents
incorporated by reference in the Registration Statement and Prospectus or any amendment thereof or
supplement thereto, as such Underwriters may reasonably request. Prior to 10:00 A.M., New York
time, on the business day next succeeding the date of this Agreement and from time to time
thereafter, the Company will furnish each Underwriter with copies of the Prospectus in New York
City in such quantities as such Underwriters may reasonably request. If applicable, copies of the
Preliminary Prospectus, Preliminary Prospectus Supplement, Prospectus, Registration Statement and
General Disclosure Package, and any amendments or supplements thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(f) The Company will make generally available to its security holders and to the Underwriters
as soon as practicable, but in any event not later than the end of the fiscal quarter first
occurring after the first anniversary of the date that the Prospectus Supplement is filed pursuant
to Rule 424(b) under the Securities Act, an earnings statement of the Company and the Subsidiaries
(which need not be audited) complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule 158) covering a period of twelve months
beginning on the date that the Prospectus Supplement is filed pursuant to Rule 424(b) under the
Securities Act.
(g) During the period of five years from the Closing Date, the Company will furnish to you
copies of all reports or other communications (financial or other) furnished to security holders or
from time to time published or publicly disseminated by the Company, and will deliver to you (i) as
soon as they are available, copies of any reports, financial statements and proxy or information
statements furnished to or filed with the Commission or any national securities exchange on which
any class of securities of the Company is listed;
provided
,
however
, that the
Company shall not be required to provide each Underwriter with any such reports that have been
filed with the Commission by electronic transmission pursuant to EDGAR, and (ii) such additional
information concerning the business and financial condition of the Company as you may from time to
time reasonably request (such financial information to be on a consolidated basis to the extent the
accounts of the Company and the Subsidiaries are consolidated in reports furnished to its security
holders generally or to the Commission).
22
(h) The Company will apply the net proceeds from the sale of the Shares as set forth under the
caption Use of Proceeds in the Prospectus.
(i) The Company will use its best efforts to list the Shares and the Conversion Shares,
subject to official notice of issuance, on The New York Stock Exchange and maintain the listing of
the Shares and the Conversion Shares issuable upon conversion of the Shares on the Exchange. The
Company will reserve and keep available at all times, free of preemptive rights, a sufficient
number of Common Shares for the purpose of enabling the Company to satisfy any obligation to issue
Conversion Shares.
(j) The Company, during the period when the Prospectus is required to be delivered under the
Securities Act or the Exchange Act, will file all documents required to be filed with the
Commission pursuant to the Securities Act, the Exchange Act and the Rules and Regulations within
the time periods required thereby. The Company has given the Underwriter notice of any filings
made pursuant to the Rules and Regulations within 48 hours prior to the Applicable Time; the
Company will give the Underwriter notice of its intention to make any such filing from the
Applicable Time to the Closing Date and, if applicable, each Additional Closing Date, and will
furnish the Underwriter with copies of any such documents a reasonable amount of time prior to such
proposed filing, as the case may be, and will not file or use any such document to which the
Underwriter or Underwriters counsel shall object.
(k) The Company will not at any time, directly or indirectly, take any action designed to, or
which might reasonably be expected to, cause or result in, or which has constituted or which might
reasonably be expected to constitute, a violation of Regulation M under the Exchange Act, or the
stabilization of the price of its shares of beneficial interest to facilitate the sale or resale of
any of the Shares.
(l) The Company will use its best efforts to continue to meet the requirements to qualify as a
REIT under the Code for each of its taxable years for so long as the board of trustees deems it in
the best interests of the Companys shareholders to remain so qualified.
(m) The Company will not be or become, at any time prior to the expiration of three years
after the date of the Agreement, an investment company, as such term is defined in the 40 Act.
(n) The Company will maintain a transfer agent and, if necessary under the jurisdiction of
formation of the Company, a Registrar for its Common Shares (including the Conversion Shares),
Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares.
(o) The Company will not offer, sell, contract to sell, pledge, grant any option to purchase
or otherwise dispose of, directly or indirectly, or file with the Commission or cause to be
declared effective a registration statement under the Securities Act relating to, any shares of
beneficial interest of the Company or securities convertible into, exchangeable or
23
exercisable for or that represent the right to receive shares of beneficial interest of the
Company or warrants or other rights to purchase shares of beneficial interest or any other
securities of the Company that are substantially similar to shares of beneficial interest of the
Company, or publicly disclose the intention to make any such offer, sale, pledge, grant,
disposition or filing, for the period specified below (the
Lock-Up Period
), without the
prior written consent of the Representative, except for the registration of the Shares and the
Common Shares issuable upon conversion of the Shares and the sale of the Shares pursuant to this
Agreement, and except for (i) issuances of Common Shares upon the exercise of options or warrants
disclosed as outstanding in or incorporated by reference in the General Disclosure Package and the
Prospectus; (ii) the issuance of employee stock options not exercisable during the Lock-Up Period
and restricted share awards, in each case pursuant to equity compensation plans described in the
General Disclosure Package and the Prospectus; (iii) the issuance of partnership interests in
connection with ordinary course property acquisitions that are exchangeable for Common Shares; and
(iv) the filing of a universal shelf registration statement under Rule 415 of the Securities Act
covering securities of the Company;
provided
that in the cases described in clauses (i),
(ii) and (iii) above, these transfers be made subject to no further transfer during the Lock-Up
Period. The initial Lock-Up Period will commence on the date hereof and will continue and include
the date 90 days after the date hereof or such earlier date that the Underwriter consents to in
writing;
provided
,
however
, that if (1) during the last 17 days of the initial
Lock-Up Period, the Company releases earnings results or material news or a material event relating
to the Company occurs or (2) prior to the expiration of the initial Lock-Up Period, the Company
announces that it will release earnings results during the 16-day period beginning on the last day
of the initial Lock-Up Period, then in each case the Lock-Up Period will be extended until the
expiration of the 18-day period beginning on the date of the release of the earnings results or the
occurrence of the material news or material event, as applicable, unless the Representative waives,
in writing, such extension. The Company will provide the Underwriters with notice of any
announcement described in clause (2) of the preceding sentence that gives rise to an extension of
the Lock-Up Period.
(p) The Company will use its best efforts, in cooperation with the Underwriters, to qualify
the Shares and the Conversion Shares for offering and sale under the applicable securities laws of
such states and other jurisdictions (domestic or foreign) as the Representative may designate and
to maintain such qualifications in effect so long as may be required for the distribution of the
Shares;
provided
,
however
, that the Company shall not be obligated to file any
general consent to service of process or to qualify or register as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so qualified or registered, or to
subject itself to taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject. In each jurisdiction in which the Shares have been so qualified or
registered, the Company will file such statements and reports as may be required by the laws of
such jurisdiction to continue such qualification in effect for so long as may be required for the
distribution of the Shares. The Company will promptly advise the Underwriter of the receipt by the
Company of any notification with respect to the suspension of the qualification of the Shares and
the Conversion Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will comply with all requirements imposed upon it
24
by the Securities Act and the Exchange Act as from time to time in force, so far as necessary
to permit the continuance of sales of, or dealings in, the Shares and the Conversion Shares, as
contemplated by the provisions hereof, the Registration Statement, the Prospectus and the General
Disclosure Package.
(q) The Company will use its best efforts to do and perform all things required to be done or
performed under this Agreement by the Company prior to the Closing Date or the Additional Closing
Date, as the case may be, and to satisfy all conditions precedent to the delivery of the Firm
Shares and the Additional Shares.
(r) The Company will comply with all effective applicable provisions of the Sarbanes-Oxley
Act.
5.
Free Writing Prospectuses
. The Company represents and agrees that, unless it
obtains the prior consent of the Representative, and each Underwriter represents and agrees that,
subject to the last sentence of this Section, unless it obtains the prior consent of the Company
and the Representative, it has not made and will not make any offer relating to the Shares that
would constitute an Issuer Free Writing Prospectus, or that would otherwise constitute a free
writing prospectus, as defined in Rule 405 of the Securities Act Rules and Regulations. Any such
free writing prospectus consented to by the Company and the Representative is hereinafter referred
to as a
Permitted Free Writing Prospectus
. The Company represents that it has treated and
agrees that it will treat each Permitted Free Writing Prospectus as an issuer free writing
prospectus, as defined in Rule 433 of the Securities Act Rules and Regulations, and has complied
and will comply with the requirements of Rule 433 of the Securities Act Rules and Regulations
applicable to any Permitted Free Writing Prospectus, including timely Commission filing where
required, legending and record keeping. Notwithstanding the foregoing, the Underwriter may use a
free writing prospectus that contains no issuer information (as defined in Rule 433 of the
Securities Act Rules and Regulations) that was not included (including through incorporation by
reference) in the Preliminary Prospectus or a previously filed Issuer Free Writing Prospectus and,
prior to the preparation of the Final Term Sheet, may use the information with respect to the final
terms of the Shares in communications conveying information relating to the offering to investors.
6.
Payment of Expenses
. Whether or not the transactions contemplated by this
Agreement, the Registration Statement and the Prospectus are consummated or this Agreement is
terminated, the Company hereby agrees to pay all costs and expenses incident to the performance of
its obligations hereunder, including the following: (i) all expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary Prospectus, any
Issuer Free Writing Prospectus, the General Disclosure Package and the Prospectus and any and all
amendments and supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the fees, disbursements and expenses of the Companys counsel and
accountants in connection with the registration of the Shares (and the Conversion Shares) under the
Securities Act and the Offering; (iii) the cost of producing this Agreement and any agreement among
underwriters, blue sky survey, closing
25
documents and other instruments, agreements or documents (including any compilations thereof)
in connection with the Offering; (iv) all expenses in connection with the qualification of the
Shares (and the Conversion Shares) for offering and sale under state securities laws, if required,
including the fees and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with any blue sky survey; (v) the filing fees incident to, and the
fees and disbursements of counsel for the Underwriters in connection with, securing any required
review by the NASD of the terms of the Offering; (vi) all fees and expenses in connection with the
preparation and filing of the Registration Statement on Form 8-A relating to the Shares (and the
Conversion Shares) and all fees and expenses in connection with listing the Shares (and the
Conversion Shares) on The New York Stock Exchange; (vii) all travel expenses of the Companys
officers and employees and any other expense of the Company incurred in connection with attending
or hosting meetings with prospective purchasers of the Shares; (viii) any stock transfer taxes
incurred in connection with this Agreement or the Offering; and (ix) the costs and expenses
(including without limitation any damages) associated with the reforming of any contracts for sale
of the Shares made by the Underwriters caused by a breach of the representation contained in
Section 1(d) hereof. The Company also will pay or cause to be paid: (x) the cost of preparing
stock certificates, if any, representing the Shares (and the Conversion Shares); (y) the cost and
charges of any transfer agent or registrar for the Shares (and the Conversion Shares); and (z) all
other costs and expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section 6. It is understood, however, that except as
provided in this Section, and Sections 8, 9 and 11 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of its counsel and stock transfer taxes on resale of any
of the Shares by the Underwriters. Notwithstanding anything to the contrary in this Section 6, in
the event that this Agreement is terminated pursuant to Section 7 or 11(b) hereof, or subsequent to
a Material Adverse Change, the Company will pay all out-of-pocket expenses of the Underwriters
(including but not limited to fees and disbursements of counsel to the Underwriters) incurred in
connection herewith.
7.
Conditions of Underwriters Obligations
. The obligations of the several
Underwriters to purchase and pay for the Firm Shares and the Additional Shares, as provided herein,
shall be subject to the accuracy of the representations and warranties of the Company herein
contained, as of the date hereof, as of the Applicable Time and as of the Closing Date (for
purposes of this Section 7 Closing Date shall refer to the Closing Date for the Firm Shares and
any Additional Closing Date, if different, for the Additional Shares), to the absence from any
certificates, opinions, written statements or letters furnished to you or to Underwriters Counsel
pursuant to this Section 7 of any material misstatement or omission, to the performance by the
Company of its obligations hereunder, and to each of the following additional conditions:
(a) The Registration Statement shall have become effective and all necessary regulatory
approvals shall have been received not later than 5:30 P.M., New York time, on the date of this
Agreement, or at such later time and date as shall have been consented to in writing by the
Representative; the Prospectus containing information relating to the description of the Shares and
the method of distribution and similar matters shall have been filed with the Commission pursuant
to Rule 424(b) in accordance with Section 4(a) hereof; and, at or
26
prior to the Closing Date no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof shall have been issued and no proceedings
therefor shall have been initiated or threatened by the Commission, nor has any state securities
authority suspended the qualification or registration of the Shares for offering or sale in any
jurisdiction and any request of the Commission for additional information (to be included in the
Registration Statement, the General Disclosure Package or the Prospectus or otherwise) shall have
been complied with to the satisfaction of the Underwriters and Underwriters Counsel. Each Issuer
Free Writing Prospectus shall have been timely filed with the Commission under Rule 433 or 164 of
the Securities Act Rules and Regulations (to the extent required by Rule 433 of the Securities Act
Rules and Regulations).
(b) The Underwriters shall not have advised the Company that the Registration Statement or any
amendment thereto contains an untrue statement of fact that in the opinion of the Underwriters or
Underwriters Counsel is material or omits to state a fact that in the opinion of the Underwriters
or Underwriters Counsel is material and is required to be stated therein or is necessary to make
the statements therein not misleading, that the General Disclosure Package (at the Applicable Time
and at the Closing Date) or the Prospectus, or any amendment or supplement thereto, contains an
untrue statement of fact that in the opinion of the Underwriters or Underwriters Counsel is
material or omits to state a fact that in the opinion of the Underwriter or Underwriters Counsel
is material and is necessary, in the light of the circumstances under which they were made, to make
the statements therein not misleading.
(c) At the Closing Date you shall have received the favorable written opinion of Stinson
Morrison Hecker LLP, counsel for the Company, dated the Closing Date addressed to the Underwriters
substantially in the form attached hereto as
Annex 1
.
(d) All proceedings taken in connection with the sale of the Firm Shares and the Additional
Shares as herein contemplated shall be satisfactory in form and substance to the Underwriters and
to Underwriters Counsel, and the Underwriters shall have received from Underwriters Counsel a
favorable written opinion, dated as of the Closing Date, with respect to the issuance and sale of
the Shares, the Registration Statement, the General Disclosure Package and the Prospectus and such
other related matters as the Representative may require, and the Company shall have furnished to
Underwriters Counsel such documents as they may reasonably request for the purpose of enabling
them to pass upon such matters.
(e) At the Closing Date, the Underwriters shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of the Company, dated the Closing Date to the effect
that (i) the condition set forth in subsection (a) of this Section 7 has been satisfied, (ii) as of
the date hereof and as of the Closing Date, the representations and warranties of the Company set
forth in Section 1 hereof are accurate, (iii) as of the Closing Date all agreements, conditions and
obligations of the Company to be performed or complied with hereunder on or prior thereto have been
duly performed or complied with, (iv) the Company and the Subsidiaries have not sustained any
material loss or interference with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not
27
covered by insurance, or from any labor dispute or any legal or governmental proceeding, (v)
no stop order suspending the effectiveness of the Registration Statement or any post-effective
amendment thereof has been issued and no proceedings therefor have been initiated or threatened by
the Commission and (vi) subsequent to the respective dates as of which information is given in the
Registration Statement, the General Disclosure Package and the Prospectus there has not been any
Material Adverse Change or any development involving a prospective Material Adverse Change, whether
or not arising from transactions in the ordinary course of business, in or affecting (x) the
business, condition (financial or otherwise), results of operations, shareholders equity,
properties, affairs or prospects of the Company and the Subsidiaries, taken as a whole; (y) the
long-term debt, shares of beneficial interest or capital stock of the Company or any of its
Subsidiaries; or (z) the Offering or consummation of any of the other transactions contemplated by
this Agreement, the Registration Statement and the Prospectus.
(f) At the time this Agreement is executed and at the Closing Date, you shall have received
(i) a comfort letter from KPMG LLP, independent public accountants for the Company, and (ii) a
comfort certificate of each of the Chief Financial Officer, Controller and Vice President-Finance
of the Company, in each case dated as of the date of this Agreement and as of the Closing Date
addressed to the Underwriters and in form and substance satisfactory to the Representative and
Underwriters Counsel.
(g) Subsequent to the execution and delivery of this Agreement or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any amendment thereof), the
General Disclosure Package and the Prospectus and through the Closing, there shall not have been
any material change in the shares of beneficial interest or capital stock (except pursuant to the
Companys dividend reinvestment plan, as in effect on the date hereof, or the exercise of vested
options), or long-term debt of the Company or any of the Subsidiaries or any change or development
involving a change, whether or not arising from transactions in the ordinary course of business, in
the business, condition (financial or otherwise), results of operations, shareholders equity,
properties, affairs or prospects of the Company and the Subsidiaries, taken as a whole, including
but not limited to the occurrence of any fire, flood, explosion or other calamity at any of the
properties owned or leased by the Company or any of its Subsidiaries, the effect of which, in any
such case described above, is, in the reasonable judgment of the Representative, so material and
adverse as to make it impracticable or inadvisable to proceed with the Offering on the terms and in
the manner contemplated in the General Disclosure Package and the Prospectus (exclusive of any
supplement).
(h) Prior to the Closing Date, the Shares and the Conversion Shares shall have been approved
for listing, subject to official notice of issuance, on the Exchange.
(i) Subsequent to the execution and delivery of this Agreement (i) no downgrading or adverse
change shall have occurred in the rating accorded any security of the Company by any nationally
recognized statistical rating organization, as that term is defined by the Commission for purposes
of Rule 436(g)(2) of the Securities Act Rules and Regulations
28
and (ii) no such organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any security of the Company, that, in
either event, makes it impractical or inadvisable, in the Underwriters judgment, to offer or
deliver the Shares on the terms and in the manner contemplated in the General Disclosure Package
and the Prospectus.
(j) Prior to the Closing Date, the Company shall have obtained for the benefit of the
Underwriters the agreement (a
Lock-Up Agreement
), in the form set forth as
Annex
2
hereto, of each of its executive officers.
(k) The Company shall have furnished the Underwriters and Underwriters Counsel with such
other certificates, opinions or other documents as they may have reasonably requested.
If any of the conditions specified in this Section 7 shall not have been fulfilled when and as
required by this Agreement, or if any of the certificates, opinions, written statements or letters
furnished to the Underwriters or to Underwriters Counsel pursuant to this Section 7 shall not be
satisfactory in form and substance to the Representative and Underwriters Counsel, acting
reasonably, all obligations of the Underwriters hereunder may be cancelled by the Representative
at, or at any time prior to, the Closing Date and the obligations of the Underwriters to purchase
the Additional Shares may be cancelled by the Representative at, or at any time prior to, the
Additional Closing Date. Notice of such cancellation shall be given to the Company in writing, or
by telephone. Any such telephone notice shall be confirmed promptly thereafter in writing.
8.
Indemnification
.
(a) The Company shall indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or
expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration Statement, as originally
filed or any amendment thereof, or any related Preliminary Prospectus, any Issuer Free Writing
Prospectus (including any General Use Issuer Free Writing Prospectus or Limited Use Issuer Free
Writing Prospectus), the General Disclosure Package or the Prospectus, or in any supplement thereto
or amendment thereof, or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein
not misleading;
provided
,
however
, that the Company will not be liable in any such
case to the extent but only to the extent that any such loss, liability, claim, damage or expense
arises out of or is based upon any such untrue statement
29
or alleged untrue statement or omission or alleged omission made therein in reliance upon and
in conformity with written information furnished to the Company by or on behalf of the Underwriters
through you expressly for use therein. The parties agree that such information provided by or on
behalf of the Underwriters through you consists solely of the material referred to in the second to
last sentence of Section 1(b) hereof. This indemnity agreement will be in addition to any
liability which the Company may otherwise have, including but not limited to other liability under
this Agreement.
(b) Each Underwriter severally and not jointly shall indemnify and hold harmless the Company,
each of the trustees of the Company and each other person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any
losses, liabilities, claims, damages and expenses whatsoever as incurred (including but not limited
to attorneys fees and any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to which they or any of
them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof, or any related Preliminary
Prospectus, any Issuer Free Writing Prospectus, the General Disclosure Package or the Prospectus,
or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only to the extent,
that any such loss, liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with information furnished in writing to the Company by or on
behalf of the Underwriters through you specifically for use therein;
provided
,
however
, that in no case shall any Underwriter be liable or responsible for any amount in
excess of the underwriting discount or commission applicable to the Shares to be purchased by such
Underwriter hereunder. This indemnity will be in addition to any liability which such Underwriter
may otherwise have, including but not limited to other liability under this Agreement. The parties
acknowledge and agree that such information provided by or on behalf of the Underwriters through
you consists solely of the material referred to in the second to last sentence of Section 1(b)
hereof.
(c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice
of any claims or the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under such subsection, notify each
party against whom indemnification is to be sought in writing of the claim or the commencement
thereof, but the failure so to notify an indemnifying party shall not relieve the indemnifying
party from any liability which it may have under this Section 8. In case any such claim or action
is brought against any indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate, at its own expense in the defense
of such action, and to the extent it may elect by
30
written notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel satisfactory to such
indemnified party;
provided
,
however
, that counsel to the indemnifying party shall
not (except with the written consent of the indemnified party) also be counsel to the indemnified
party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of such counsel shall
be at the expense of such indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by one of the indemnifying parties in connection with the
defense of such action, (ii) the indemnifying parties shall not have employed counsel to have
charge of the defense of such action within a reasonable time after notice of commencement of the
action, (iii) the indemnifying party does not diligently defend the action after assumption of the
defense, or (iv) such indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional to those available to
one or all of the indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or parties), in any
of which events such fees and expenses shall be borne by the indemnifying parties. No indemnifying
party shall, without the prior written consent of the indemnified parties, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending or threatened
claim, investigation, action or proceeding in respect of which indemnity or contribution may be or
could have been sought by an indemnified party under this Section 8 or Section 9 hereof (whether or
not the indemnified party is an actual or potential party thereto), unless (x) such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such claim, investigation, action or proceeding and (ii) does not include
a statement as to or an admission of fault, culpability or any failure to act, by or on behalf of
the indemnified party, and (y) the indemnifying party confirms in writing its indemnification
obligations hereunder with respect to such settlement, compromise or judgment.
9.
Contribution
. In order to provide for contribution in circumstances in which the
indemnification provided for in Section 8 hereof is for any reason held to be unavailable from any
indemnifying party or is insufficient to hold harmless a party indemnified thereunder, the Company
and the Underwriters shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any contribution received by the
Company from persons, other than the Underwriters, who may also be liable for contribution,
including persons who control the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, officers of the Company who signed the Registration Statement and
trustees of the Company) as incurred to which the Company and the Underwriters may be subject, in
such proportions as is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the Offering or, if such allocation is not
permitted by applicable law, in such proportion as are appropriate to reflect not only the relative
benefits referred to above but also
31
the relative fault of the Company on the one hand and the Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the other hand shall be
deemed to be in the same proportion as (x) the total proceeds from the Offering (net of
underwriting discounts and commissions but before deducting expenses) received by the Company bears
to (y) the underwriting discount or commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault of the Company and of
the Underwriters shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters and the parties relative
intent, knowledge, access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in this Section 9.
The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 9 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions of this Section 9, (i)
no Underwriter shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which the Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged omission and (ii)
no person guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the
Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 9, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act shall have the same rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each officer of the Company who shall have signed the Registration Statement and each
trustee of the Company shall have the same rights to contribution as the Company, subject in each
case to clauses (i) and (ii) of the immediately preceding sentence. The Underwriters respective
obligations to contribute pursuant to this Section 9 are several in proportion to the number of
Firm Shares set forth opposite their respective names in
Schedule I
hereto and not joint.
Any party entitled to contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for contribution may be
made against another party or parties, notify each party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve the party or parties
from whom contribution may be sought from any obligation it or they may have under this Section 9
or otherwise.
32
10.
Survival of Representations and Agreements
. All representations and
warranties, covenants and agreements of the Underwriters and the Company contained in this
Agreement or in certificates of officers of the Company or any Subsidiary submitted pursuant
hereto, including the agreements contained in Section 6, the indemnity agreements contained in
Section 8 and the contribution agreements contained in Section 9, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of the Underwriters or
any controlling person thereof or by or on behalf of the Company, any of its officers and trustees
or any controlling person thereof, and shall survive delivery of and payment for the Shares to and
by the Underwriters. The representations and agreements contained in Sections 1, 5, 6, 8, 9, 10,
11 and 13 through 19, inclusive, hereof shall survive any termination of this Agreement, including
termination pursuant to Section 11 hereof.
11.
Effective Date of Agreement; Termination
.
(a) This Agreement shall become effective upon the execution of this Agreement. Until this
Agreement becomes effective as aforesaid, it may be terminated by the Company by notifying you or
by the Representative notifying the Company. Notwithstanding any termination of this Agreement,
the provisions of this Section 11 and of Sections 1, 5, 6, 8, 9, 10 and 13 through 19, inclusive,
shall be in full force and effect at all times after the execution hereof.
(b) The Representative shall have the right to terminate this Agreement at any time prior to
the Closing Date or to terminate the obligation, if any, of the Underwriter to purchase the
Additional Shares at any time prior to the Additional Closing Date, as the case may be, if (A)
there has been, since the time of execution of this Agreement or since the respective dates as of
which information is given in the General Disclosure Package and the Prospectus (exclusive of any
supplement thereto), any material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and the Subsidiaries considered
as one enterprise, whether or not arising in the ordinary course of business, (B) any domestic or
international event or act or occurrence has materially disrupted, or in the opinion of the
Representative will in the immediate future materially disrupt, the market for the Companys
securities or securities in general; or (C) if trading on The New York Stock Exchange shall have
been suspended or been made subject to material limitations, or minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices for securities shall have been
required, on the Exchange or by order of the Commission or any other governmental authority having
jurisdiction; or (D) if a banking moratorium has been declared by any state or federal authority or
if any material disruption in commercial banking or securities settlement or clearance services
shall have occurred; or (E) any downgrading shall have occurred in the Companys corporate credit
rating or the rating accorded the Companys debt securities or preferred stock by any nationally
recognized statistical rating organization (as defined for purposes of Rule 436(g) under the
Securities Act) or if any such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of any of the Companys
debt securities; or (F) (i) if there shall have occurred any outbreak or escalation of hostilities
or acts of terrorism involving the United States or there is a declaration of
33
a national emergency or war by the United States or (ii) if there shall have been any other
calamity or crisis or any change in political, financial or economic conditions if the effect of
any such event in (i) or (ii), in the judgment of the Representative, makes it impracticable or
inadvisable to proceed with the offering, sale and delivery of the Firm Shares or the Additional
Shares, as the case may be, on the terms and in the manner contemplated by the General Disclosure
Package and the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be in writing.
(d) If this Agreement shall be terminated pursuant to any of the provisions hereof (other than
pursuant to notification by the Representative as provided in Section 11(a) hereof), or if the sale
of the Shares provided for herein is not consummated because any condition to the obligations of
the Underwriters set forth herein is not satisfied or because of any refusal, inability or failure
on the part of the Company to perform any agreement herein or comply with any provision hereof, the
Company will, subject to demand by the Representative, reimburse the Underwriters for all
out-of-pocket expenses (including the fees and expenses of their counsel), incurred by the
Underwriters in connection herewith.
12.
Default by One of the Underwriters
. If one of the Underwriters shall fail at the
Closing Date or the Additional Closing Date to purchase the Shares which it is obligated to
purchase under this Agreement (the
Defaulted Shares
), the Representative shall have the
right, within 24 hours thereafter, to make arrangements for it, or any other of the non-defaulting
Underwriters, or any other Underwriters, to purchase all, but not less than all, of the Defaulted
Shares in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the
Representative shall not have completed such arrangements within such 24-hour period, then:
(i) if the number of the Defaulted Shares does not exceed 10% of the number of Shares to be
purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally and
not jointly, to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting
Underwriters; or
(ii) if the number of Defaulted Shares exceeds 10% of the number of Shares to be purchased on
such date, this Agreement, or, with respect to any Additional Closing Date which occurs after the
Closing Date, the obligation of the Underwriters to purchase and of the Company to sell the
Additional Shares to be purchased and sold on the Additional Closing Date, shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 12 shall relieve any defaulting Underwriter from
liability in respect of its default.
In the event of any such default which does not result in (i) termination of this Agreement,
or (ii) in the case of an Additional Closing Date which is after the Closing Date, a
34
termination of the obligation of the Underwriters to purchase and the Company to sell the
relevant Additional Shares, as the case may be, either the non-defaulting Underwriter or the
Company shall have the right to postpone the Closing Date or the relevant Additional Closing Date,
as the case may be, for a period not exceeding seven days in order to effect any required changes
in the Registration Statement or Prospectus or in any other documents or arrangements and the
Company agrees to file promptly any amendment or supplement to the Registration Statement or the
Prospectus which, in the opinion of Underwriters Counsel, may thereby be made necessary or
advisable. The term Underwriter as used in this Agreement shall include any party substituted
under this Section 12 with like effect as if it had originally been a party to this Agreement with
respect to such Firm Shares and Additional Shares.
13.
Notices
. All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing, and:
(a) if sent to any Underwriter, shall be mailed, delivered, or faxed and confirmed in writing,
to the Representative c/o Bear, Stearns & Co. Inc., 383 Madison Avenue, New York, New York 10179,
Attention: Stephen Parish, Senior Managing Director, Equity Transaction Group, with a copy to
Underwriters Counsel at Dechert LLP, 30 Rockefeller Plaza, New York, New York 10112, Attention:
Bonnie Barsamian, Esq.; and
(b) if sent to the Company, shall be mailed, delivered, or faxed and confirmed in writing to
the Company and its counsel at the addresses set forth in the Registration Statement, Attention:
Chief Executive Officer;
provided
,
however
, that any notice to an Underwriter pursuant to Section 7
shall be delivered or sent by mail or facsimile transmission to such Underwriter at its address set
forth in its acceptance facsimile to the Representative, which address will be supplied to any
other party hereto by the Representative upon request.
Any such notices and other communications shall take effect at the time of receipt thereof.
14.
Parties
. This Agreement shall inure solely to the benefit of, and shall be
binding upon, the Underwriters and the Company and the controlling persons, directors, trustees,
officers, employees and agents referred to in Sections 8 and 9 hereof, and their respective
successors and assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and said controlling persons and
their respective successors, officers, directors, trustees, employees, agents, heirs and legal
representatives, and it is not for the benefit of any other person, firm or corporation. The term
successors and assigns shall not include a purchaser, in its capacity as such, of Shares from the
Underwriters.
35
15.
Governing Law and Jurisdiction; Waiver of Jury Trial
. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The Company
irrevocably (a) submits to the jurisdiction of any court of the State of New York or the United
States District Court for the Southern District of the State of New York for the purpose of any
suit, action, or other proceeding arising out of this Agreement, or any of the agreements or
transactions contemplated by this Agreement, the Registration Statement and the Prospectus (each, a
Proceeding
), (b) agrees that all claims in respect of any Proceeding may be heard and
determined in any such court, (c) waives, to the fullest extent permitted by law, any immunity from
jurisdiction of any such court or from any legal process therein, (d) agrees not to commence any
Proceeding other than in such courts, and (e) waives, to the fullest extent permitted by law, any
claim that such Proceeding is brought in an inconvenient forum. THE COMPANY (ON BEHALF OF ITSELF
AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND
CREDITORS) HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, THE REGISTRATION STATEMENT AND THE PROSPECTUS.
16.
Absence of Fiduciary Relationship
. The Company acknowledges and agrees that:
(a) The Underwriter has been retained solely to act as underwriter in connection with the sale
of the Companys securities and that no fiduciary, advisory or agency relationship between the
Company and the Underwriter has been created in respect of any of the transactions contemplated by
this Agreement, irrespective of whether the Underwriter has advised or is advising the Company on
other matters;
(b) the price of the securities set forth in this Agreement was established by the Company
following discussions and arms-length negotiations with the Underwriter, and the Company is capable
of evaluating and understanding and understands and accepts the terms, risks and conditions of the
transactions contemplated by this Agreement;
(c) it has been advised that the Underwriter and its affiliates are engaged in a broad range
of transactions which may involve interests that differ from those of Company and that the
Underwriter has no obligation to disclose such interests and transactions to Company by virtue of
any fiduciary, advisory or agency relationship; and
(d) it waives, to the fullest extent permitted by law, any claims it may have against the
Underwriter for breach of fiduciary duty or alleged breach of fiduciary duty in respect of the
transactions contemplated by this Agreement and agrees that the Underwriter shall have no liability
(whether direct or indirect) to Company in respect of such a fiduciary duty claim or to any person
asserting a fiduciary duty claim on behalf of or in right of the Company, including shareholders,
employees or creditors of the Company.
36
17.
Counterparts
. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all such counterparts shall together constitute one
and the same instrument. Delivery of a signed counterpart of this Agreement by facsimile
transmission shall constitute valid and sufficient delivery thereof.
18.
Headings
. The headings herein are inserted for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.
19.
Time is of the Essence
. Time shall be of the essence in this Agreement. As used
herein, the term business day shall mean any day when the Commissions office in Washington, D.C.
is open for business.
[signature page follows]
37
If the foregoing correctly sets forth your understanding, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a binding agreement among
us.
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Very truly yours,
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ENTERTAINMENT PROPERTIES TRUST
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By:
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/s/ Mark A. Peterson
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Name: Mark A. Peterson
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Title: Vice President
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Accepted as of the date first above
written, for itself and as Representative
of the Underwriters named on
Schedule
I
hereto
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BEAR, STEARNS & CO. INC.
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By:
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/s/ Paul S. Rosica
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Name: Paul S. Rosica
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Title: Senior Managing Director
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SCHEDULE I
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Name of Underwriter
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Number of Firm Shares
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Bear, Stearns & Co. Inc.
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3,240,000
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RBC Capital Markets Corporation
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2,160,000
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Total
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5,400,000
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SchI-1
SCHEDULE II
Preliminary Term Sheet/New Issue Alert, issued on December 18, 2006
Preliminary Term Sheet/Revised New Issue Alert, issued on December 19, 2006
Issuer Free Writing Prospectus filed with the Securities and Exchange Commission on December 19,
2006, relating to the change in the Company Conversion Option
Final Term Sheet/Issuer Free Writing Prospectus, dated December 19, 2006
Sch II-1
EXHIBIT A
SUBSIDIARIES
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Wholly Owned Subsidiary
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Jurisdiction of Organization
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EPT DownREIT, Inc.
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Missouri
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EPT DownREIT II, Inc.
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Missouri
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3 Theatres, Inc.*
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Missouri
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Megaplex Holdings, Inc.
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Missouri
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Megaplex Nine Inc.
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Missouri
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Theatre Sub Inc.*
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Missouri
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Megaplex Four Inc.*
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Missouri
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EPR Canada, Inc.
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Missouri
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EPT Melbourne, Inc.
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Missouri
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EPR TRS Holdings, Inc.
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Missouri
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EPR TRS I, Inc.
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Missouri
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EPR TRS II, Inc.
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Missouri
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VinREIT, LLC
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Delaware
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WestCol Holdings LLC
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Delaware
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WestCol Corp.
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Delaware
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WestCol Center LLC*
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Delaware
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WestCol Theatre LLC
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Delaware
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Westminster Promenade Owners Association LLC
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Colorado
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Flik, Inc.
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Delaware
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Ex A-1
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Wholly Owned Subsidiary
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Jurisdiction of Organization
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Flik Depositor, Inc.
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Delaware
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Tampa Veterans 24, Inc.
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Delaware
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Cantera 30, Inc.
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Delaware
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EPT Waterparks, Inc.
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Delaware
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EPR Hialeah, Inc.
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Missouri
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EPT New Roc LLC
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Delaware
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EPT New Roc GP, Inc.
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Delaware
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30 West Pershing LLC
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Missouri
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EPR North Trust
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Delaware
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EPR Metropolis Trust
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Delaware
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Burbank Village, Inc.
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Delaware
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Burbank Village, L.P.
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Delaware
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Exit 108 Entertainment LLC AL
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Alabama
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EPT Kalamazoo, Inc.
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Missouri
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EPT Pensacola, Inc.
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Missouri
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EPT Crotched Mountain, Inc.
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Missouri
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EPT Mad River, Inc.
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Missouri
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EPT Davie, Inc.
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Delaware
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EPT Aliso Viejo, Inc.
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Delaware
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EPT Boise, Inc.
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Delaware
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EPT Deer Valley, Inc.
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Delaware
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EPT Hamilton, Inc.
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Delaware
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Ex A-2
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Wholly Owned Subsidiary
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Jurisdiction of Organization
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EPT Little Rock, Inc.
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Delaware
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EPT Pompano, Inc.
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Delaware
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EPT Raleigh Theatres, Inc.
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Delaware
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EPT Arroyo, Inc.
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Delaware
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EPT Auburn, Inc.
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Delaware
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EPT Biloxi, Inc.
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Delaware
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EPT Columbiana, Inc.
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Delaware
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EPT Fresno, Inc.
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Delaware
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EPT Hoffman Estates, Inc.
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Delaware
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EPT Huntsville, Inc.
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Delaware
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EPT Hurst, Inc.
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Delaware
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EPT Lafayette, Inc.
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Delaware
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EPT Macon, Inc.
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Delaware
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EPT Mesa, Inc.
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Delaware
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EPT Modesto, Inc.
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Delaware
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EPT Wilmington, Inc.
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Delaware
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Pompano Retail, Inc.
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Delaware
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Suffolk Retail, Inc.
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Delaware
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Kanata Entertainment Holdings, Inc.
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New Brunswick, Canada
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Mississauga Entertainment Holdings, Inc.
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New Brunswick, Canada
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Oakville Entertainment Holdings, Inc.
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New Brunswick, Canada
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Whitby Entertainment Holdings, Inc.
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New Brunswick, Canada
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Ex A-3
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Wholly Owned Subsidiary
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Jurisdiction of Organization
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Metropolis Entertainment Holdings, Inc.
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New Brunswick, Canada
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EPR North II Holdings, Inc.
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New Brunswick, Canada
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*
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Equity interest pledged to secure loan
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Not Wholly Owned Subsidiary
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Jurisdiction of Organization
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Tampa Veterans 24, L.P.
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Delaware
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(limited partnership interest wholly-
owned by Atlantic EPR II)**
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Cantera 30 Theatre, L.P.
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Delaware
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(limited partnership interest wholly-
owned by Atlantic EPR I)**
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New Roc Associates L.P.
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New York
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(general partnership interest wholly-
owned by EPT New Roc GP, Inc.; 70.4% of
limited partnership interest owned by
EPT New Roc LLC)
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**
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Atlantics interest may be exchanged for EPR shares or cash, at EPRs option.
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Ex A-4
ANNEX 1
Form of Opinion of Company Counsel
Form of Opinion of Counsel to be delivered pursuant to Section 7(c) (capitalized terms used below
but not defined below shall have the meanings set forth in the Agreement):
(i) The Company is a real estate investment trust duly formed and validly existing under and
by virtue of the laws of the State of Maryland and is in good standing with the State Department of
Assessments and Taxation of the State of Maryland with full power and authority to own, lease and
operate its properties and conduct its business as described in the Registration Statement, the
General Disclosure Package and Prospectus. Each of the Companys subsidiaries is a corporation,
limited partnership or limited liability company, as the case may be, duly formed and validly
existing in its jurisdiction of organization and is in good standing in its respective jurisdiction
of organization with full power and authority to own, lease and operate its properties and conduct
the business in which it is engaged. Each of the Company and its subsidiaries is duly qualified
and in good standing as a foreign real estate investment trust, corporation, limited partnership or
limited liability company, as the case may be, in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the nature or conduct of its business
makes such qualification necessary, except for those failures to be so qualified or in good
standing which will not in the aggregate have a Material Adverse Effect.
(ii) The Company has an authorized capitalization as set forth in the Registration Statement,
the General Disclosure Package and the Prospectus. All of the issued shares of beneficial interest
of the Company have been duly and validly authorized and issued, are fully paid and non-assessable
and are not now in violation of or subject to any preemptive or, to the best of such counsels
knowledge, similar rights that entitle or will entitle any person to acquire any shares of
beneficial interest from the Company upon issuance, sale or conversion thereof, except as described
in the General Disclosure Package and the Prospectus. All of the issued shares of capital stock,
partnership interests or membership interests, as the case may be, of each subsidiary of the
Company have been duly and validly authorized and issued and are fully paid and non-assessable and,
except as disclosed in Exhibit A to the Underwriting Agreement, are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or claims. The issued and
outstanding Common Shares, the Series A Preferred Shares, and the Series B Preferred Shares conform
to the descriptions thereof contained in the Registration Statement, the General Disclosure Package
and the Prospectus.
(iii) The Shares to be delivered on the Closing Date and the Additional Closing Date, if any,
have been duly and validly authorized by the Company for issuance and sale pursuant to the
Underwriting Agreement. When issued and delivered by the Company in accordance with the terms of
the Underwriting Agreement, the Shares will be duly
and validly
Anx I-1
issued, fully paid and non-assessable and will not have been issued in violation
of or subject to preemptive or, to the best of such counsels knowledge, similar rights that
entitle or will entitle any person to acquire any shares of beneficial interest of the Company from
the Company upon issuance or sale thereof. The Common Shares issuable upon conversion of the
Shares (the Conversion Shares) have been duly and validly authorized and reserved for issuance by
the Company and, when issued and delivered upon conversion and in accordance with the Articles
Supplementary, will be duly and validly issued, fully paid and non-assessable and will not have
been issued in violation of or subject to preemptive or, to the best knowledge of such counsel,
similar rights that entitle or will entitle any person to acquire any shares of beneficial interest
of the Company from the Company upon issuance thereof. The forms of certificate used to evidence
the Shares and the Common Shares are in due and proper form and comply with all applicable
statutory requirements, with any applicable requirements of the Companys organizational documents
and with the requirements of the New York Stock Exchange (NYSE). The Articles Supplementary are
in full force and effect. The Shares conform to the provisions of the Articles Supplementary and
the relative rights, preferences, interest and powers of the Shares are as set forth in the
Articles Supplementary, and such provisions are valid under Maryland law. The Shares and the
Conversion Shares conform in all material respects to the descriptions thereof contained in the
Registration Statement, the General Disclosure Package and the Prospectus.
(iv) The Common Shares, Series A Preferred Shares and Series B Preferred Shares currently
outstanding are listed, and the Firm Shares and Additional Shares to be sold under the Underwriting
Agreement to the Underwriters and the Conversion Shares are duly authorized for listing, on the
NYSE.
(v) The Underwriting Agreement has been duly and validly authorized, executed and delivered by
the Company. The Articles Supplementary have been duly authorized, executed and delivered by the
Company and filed on behalf of the Company with the State Department of Assessments and Taxation of
Maryland.
(vi) To the best of such counsels knowledge, there is no litigation or governmental or other
proceeding or investigation, before any court or before or by any public body or board pending or
threatened against, or involving the assets, properties or businesses of, the Company or any of its
subsidiaries, involving the Companys or any of its subsidiaries officers, trustees or directors
or to which any of the Companys or any of its subsidiaries properties or other assets are subject
which might reasonably be expected to have a Material Adverse Effect or to affect the consummation
of the transactions contemplated in the Underwriting Agreement or the performance by the Company of
its obligations thereunder.
(vii) The execution, delivery, and performance by the Company of the Underwriting Agreement
and the Articles Supplementary, and the consummation of the transactions contemplated by the
Underwriting Agreement (including the issuance and delivery of the Shares and the Conversion
Shares), the Articles Supplementary, the Registration Statement and the Prospectus do not and will
not (A) conflict with or result in a breach of any of
Anx I-2
the terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or any other
agreement, instrument, franchise, license or permit known to us to which the Company or any of its
subsidiaries is a party or by which any of the Company or any of its subsidiaries or their
respective properties or assets may be bound or (B) violate or conflict with any provision of the
declaration of trust, certificate of incorporation, certificate of limited partnership, articles of
organization, by-laws or other organizational documents, as the case may be, of the Company or any
of its subsidiaries, or, to the best knowledge of such counsel, any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their respective
properties or assets.
(viii) No consent, approval, authorization, order, registration, filing, qualification,
license or permit of or with any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their respective
properties or assets is required for the execution, delivery and performance of the Underwriting
Agreement or the consummation of the transactions contemplated by the Underwriting Agreement, the
Registration Statement and the Prospectus, except for (1) such as may be required under state
securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the
Underwriter (as to which such counsel need express no opinion) or (2) such as have been made or
obtained under the Securities Act.
(ix) The Registration Statement at the time it became effective and at the date of the filing
of the Companys Annual Report on Form 10-K for the year ended December 31, 2005, the Preliminary
Prospectus and the Prospectus and any amendments thereof or supplements thereto (other than the
financial statements and schedules and other financial data included or incorporated by reference
therein, as to which no opinion need be rendered), at the date of filing thereof with the
Commission and on the Closing Date, complied as to form in all material respects with the
requirements of the Securities Act, the Securities Exchange Act of 1934 (the Exchange Act) and
the rules and regulations of the Commission under the Securities Act and Exchange Act (Rules and
Regulations). The documents filed under the Exchange Act and incorporated by reference in the
Registration Statement, the Preliminary Prospectus included in the General Disclosure Package or
the Prospectus or any amendment thereof or supplement thereto (other than the financial statements
and schedules and other financial data included or incorporated by reference therein, as to which
no opinion need be rendered) when they became effective or were filed with the Commission, as the
case may be, complied as to form in all material respects with the Securities Act or the Exchange
Act, as applicable, and the Rules and Regulations.
(x) The statements under the captions Risk Factors, U.S. Federal Income Tax Consequences,
Additional Federal Income Tax Considerations, Description of Securities, Description of the
Series C Preferred Shares and Underwriting in the Prospectus
Anx I-3
and the Preliminary Prospectus, and in Items 14 and 15 of Part II of the
Registration Statement, insofar as such statements constitute a summary of the legal matters,
documents or proceedings referred to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings.
(xi) The Company and its subsidiaries are not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in the Prospectus, will
not be, an investment company as such term is defined in the Investment Company Act of 1940, as
amended.
(xii) The Registration Statement and all post-effective amendments, if any, have become
effective under the Securities Act, and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any post-effective amendment thereof
has been issued and no proceedings therefor have been initiated or threatened by the Commission and
all filings required by Rule 424(b) under the Securities Act have been made.
(xiii) The Company has full right, power and authority to execute and deliver and perform its
obligations under the Underwriting Agreement (including the issuance and delivery of the Shares and
the Conversion Shares), and to execute, deliver and file with Maryland State Department of
Assessments and Taxation the Articles Supplementary, and has all real estate investment trust
action required to be taken for the due and proper authorization, execution and delivery of the
Underwriting Agreement, the Articles Supplementary, the issuance and delivery of the Shares and the
Conversion Shares and the consummation of the transactions contemplated by the Underwriting
Agreement, the Registration Statement and the Prospectus and as described in the Prospectus have
been duly and validly taken.
(xiv) To the best knowledge of such counsel, there is no contract or agreement of a character
(1) to be filed under the Exchange Act if upon such filing it would be incorporated by reference in
the Registration Statement, the Preliminary Prospectus or Prospectus or (2) to be filed as an
exhibit to the Registration Statement that is not described and filed as required.
(xv) Neither the Company nor any of its subsidiaries is in violation of its respective
declaration of trust, articles of incorporation, articles of organization, certificate of limited
partnership, by-laws or other organizational documents, as the case may be, and, to the best of
such counsels knowledge after due inquiry, neither the Company nor any of its subsidiaries is in
default in the performance of any obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or instrument that is material to the
Company and its subsidiaries, taken as a whole, to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries or their respective property is bound.
(xvi) To the best knowledge of such counsel, neither the Company nor any of its subsidiaries
has violated any provisions of the Employee Retirement Income Security Act of 1974, as amended, or
any provisions of the Foreign Corrupt Practices Act, or the rules and
Anx I-4
regulations promulgated
thereunder, except for such violations, singly or in the aggregate, which would not have a Material
Adverse Effect.
(xvii) To the best knowledge of such counsel, each of the Company and its subsidiaries has
such authorizations of, and has made all filings with and notices to, all governmental or
regulatory authorities and self-regulatory organizations and all courts and other tribunals,
including, without limitation, under any applicable environmental laws, as are necessary to own,
lease, license and operate its respective properties and to conduct its respective business, except
where the failure to have any such authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect; each such authorization is valid and in
full force and effect and each of the Company and its subsidiaries is in compliance with all the
terms and conditions thereof and with the rules and regulations of the authorities and governing
bodies having jurisdiction with respect thereto; and to the best knowledge of such counsel, no
event has occurred (including, without limitation, the receipt of any notice from any authority or
governing body) which allows or, after notice or lapse of time or both, would allow, the
revocation, suspension or termination of any such authorization or results or, after notice or
lapse of time or both, would result in any other impairment of the rights of the holder of any such
authorization; such authorizations contain no restrictions that are burdensome to the Company or
any of its subsidiaries, except where such failure to be valid and in full force and effect or to
be in compliance, the occurrence of any such event or the presence of any such restriction would
not, singly or in the aggregate, have a Material Adverse Effect.
(xviii) Except as disclosed in the Registration Statement, the General Disclosure Package and
the Prospectus, there is no outstanding option, warrant or other right calling for the issuance of,
and no commitment, plan or arrangement to issue, any shares of beneficial interest of the Company,
or any security convertible into, exercisable for, or exchangeable for shares of beneficial
interest in the Company. No holder of any security of the Company has the right to have any
security owned by such holder included for registration in the Registration Statement or otherwise
registered by the Company under the Securities Act in connection with the issuance and sale of the
Shares.
(xix) The descriptions in the Registration Statement, the General Disclosure Package and the
Prospectus of statutes, legal and governmental proceedings, contracts and other documents, are
accurate and fairly present the information required to be shown in all material respects; and
counsel does not know of any statutes or legal or governmental proceedings required to be described
in the Prospectus that are not described as required, or of any contracts or documents of a
character required to be described that are not described as required, in the Registration
Statement, the General Disclosure Package or Prospectus.
(xx) The Company has satisfied all of the conditions and requirements for filing the
Registration Statement on Form S-3.
(xxi) Commencing with its taxable year ended December 31, 1997, the Company has been organized
in conformity with the requirements for qualification and taxation as a REIT for federal income tax
purposes, and, based on the facts and assumptions set forth in
Anx I-5
the Prospectus and the
representations by the Company, set forth in an Officers Certificate regarding certain federal
income tax matters, its method of operation has enabled it, and its proposed method of operation
will enable it to continue to meet the requirements under the Code for qualification and taxation
as a REIT, and the Companys partnership subsidiaries and limited liability company subsidiaries
will be treated for Federal income tax purposes as partnerships (or as disregarded entities) and
not as associations taxable as corporations or as publicly-traded partnerships.
(xxii) To the best knowledge of such counsel, each of the Company and its subsidiaries has
filed on a timely basis all necessary federal, state, local and foreign income and franchise tax
returns through the date hereof, if any such returns are required to be filed, and have paid all
taxes shown as due thereon; and no tax deficiency has been asserted against any such entity which,
if determined adversely to any such entity, could have a Material Adverse Effect.
In addition, such opinion shall also contain a statement that such counsel has participated in
conferences with officers and representatives of the Company, representatives of the independent
registered public accountants for the Company and the Underwriter at which the contents of the
Registration Statement, the General Disclosure Package, the Preliminary Prospectus and the
Prospectus and related matters were discussed and no facts have come to the attention of such
counsel which would lead such counsel to believe that (i) the Registration Statement (including the
documents incorporated by reference therein), at the time it became effective or any amendment
thereof made prior to the Closing Date, as of the date of such amendment, contained or incorporated
by reference any untrue statement of a material fact or omitted to state any material fact required
to be stated therein or necessary to make the statements therein not misleading, (ii) the
Prospectus (including the documents incorporated by reference therein), as of its date (or any
amendment thereof or supplement thereto made prior to the Closing Date as of the date of such
amendment or supplement) and as of the Closing Date, contained an untrue statement of a material
fact or omitted to state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading, and
(iii) the Preliminary Prospectus
1
(including the documents incorporated by reference
therein) and the documents, if any, specified in Schedule A to this letter (consisting of
identified issuer free writing prospectus(es) that are intended for general dissemination to
prospective investors), at the Applicable Time, when considered
together with the public offering price per Share and the number of Shares to be sold in the
offering, contained or contains an untrue statement of a material fact or omitted or omits to state
any material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (it being understood in each
case that we express no belief or opinion with respect to the financial statements and schedules
and other financial data included or incorporated by reference therein).
|
|
|
1
|
|
Note: Reference to Preliminary
Prospectus will be the latest preliminary prospectus included in the
Registration Statement and generally distributed to investors.
|
Anx I-6
ANNEX 2
ENTERTAINMENT PROPERTIES TRUST
[ ], 2006
Bear, Stearns & Co. Inc.,
as Representative to the several Underwriters
c/o Bear, Stearns & Co. Inc.
383 Madison Avenue
New York, New York 10179
Ladies and Gentlemen:
This Lock-Up Letter Agreement is being delivered to you in connection with the Underwriting
Agreement (the
Underwriting Agreement
) entered into by Entertainment Properties Trust
(the
Company
) and you, as representative of the several Underwriters named therein, with
respect to the public offering (the
Offering
) of [ ] Series C Cumulative Convertible
Preferred Shares, par value $ 0.01 per share, of the Company (the
Preferred Stock
).
In order to induce you and the other Underwriters for which you act as representative to
underwrite the Offering, the undersigned agrees that, for the period specified in the following
paragraph (the
Lock-Up Period
), the undersigned will not, without your prior written
consent, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option
to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or
increase a put equivalent position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder with respect to, any
Relevant Security (as defined below), (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership of a Relevant
Security, whether any such transaction is to be settled by delivery of Relevant Securities, other
securities, cash or otherwise, or (iii) publicly announce an intention to effect any transaction
specified in clause (i) or (ii). The foregoing sentence shall not apply to (a) bona fide gifts,
provided
the recipient thereof agrees in writing with you to be bound by the terms of this
Lock-Up Letter Agreement, (b) dispositions to any trust for the direct or indirect benefit of the
undersigned and/or the immediate family of the undersigned,
provided
that such trust agrees
in writing with you to be bound by the terms of this Lock-Up Letter Agreement, (c) the Companys
withholding of Common Shares, par value $0.01 per share, of the Company (
Common Stock
)
otherwise issuable to the undersigned pursuant to the Companys 1997 Share Incentive Plan (the
Plan
) described in the Prospectus to pay for taxes legally required to be withheld with
respect to the exercise or vesting of an award granted under the Plan, or (d) the surrender of
shares of Common Stock as consideration for the exercise of options granted pursuant to the Plan.
The undersigned further agrees that, during the Lock-Up Period, the undersigned will not, without
your prior written consent, (x) file or participate in the filing with
Anx II-1
the Securities and Exchange Commission of any registration statement, or circulate or
participate in the circulation of any preliminary or final prospectus or other disclosure document
with respect to any proposed offering or sale of a Relevant Security or (y) exercise any rights the
undersigned may have to require registration with the Securities and Exchange Commission of any
proposed offering or sale of a Relevant Security.
Relevant Security
means the Preferred
Stock, the Common Stock, any other equity security of the Company or any of its subsidiaries and
any security convertible into or exercisable or exchangeable for any Preferred Stock, Common Stock
or other such equity security.
The initial Lock-Up Period will commence on the date of this Lock-Up Letter Agreement and
continue and include the date 90 days after the public offering date set forth on the final
prospectus supplement used to sell the Preferred Stock (the
Public Offering Date
)
pursuant to the Underwriting Agreement, to which you are or expect to become a party;
provided
,
however
, that if (1) during the last 17 days of the initial Lock-Up
Period, the Company releases earnings results or material news or a material event relating to the
Company occurs or (2) prior to the expiration of the initial Lock-Up Period, the Company announces
that it will release earnings results during the 16-day period beginning on the last day of the
initial Lock-Up Period, then in each case the Lock-Up Period will be extended until the expiration
of the 18-day period beginning on the date of release of the earnings results or the occurrence of
the material news or material event, as applicable, unless you waive, in writing, such extension.
The undersigned hereby acknowledges and agrees that, prior to engaging in any transaction or
taking any other action that is subject to the terms of this Lock-Up Letter Agreement during the
period from the date of this Lock-Up Letter Agreement to and including the 34
th
day
following the expiration of the initial Lock-Up Period, it will give notice thereof to the Company
and will not consummate such transaction or take any such action unless it has received written
confirmation from the Company that the Lock-Up Period (as may have been extended pursuant to the
previous paragraph) has expired.
The undersigned hereby authorizes the Company during the Lock-Up Period to cause any transfer
agent for the Relevant Securities to decline to transfer, and to note stop transfer restrictions on
the stock register and other records relating to, Relevant Securities for which the undersigned is
the record holder.
If (i) the Company notifies you in writing that it does not intend to proceed with the
Offering, or (ii) for any reason the Underwriting Agreement shall be terminated prior to the
Closing Date (as defined in the Underwriting Agreement), this Lock-Up Letter Agreement shall be
terminated and the undersigned shall be released from its obligations hereunder.
The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Lock-Up Letter Agreement and that this Lock-Up Letter Agreement
constitutes the legal, valid and binding obligation of the undersigned, enforceable in accordance
with its terms. Upon request, the undersigned will execute any additional documents necessary in
connection with enforcement hereof. Any obligations of the undersigned shall be binding upon the
successors and assigns of the undersigned from the date first above written.
Anx II-2
This Lock-Up Letter Agreement shall be governed by and construed in accordance with the laws
of the State of New York. Delivery of a signed copy of this letter by facsimile transmission shall
be effective as delivery of the original hereof.
Anx II-3
ENTERTAINMENT PROPERTIES TRUST
ARTICLES SUPPLEMENTARY
5.75% SERIES C CUMULATIVE CONVERTIBLE PREFERRED SHARES
$0.01 PAR VALUE PER SHARE
ENTERTAINMENT PROPERTIES TRUST, a Maryland real estate investment trust (the
Trust
), having
its principal office in Kansas City, Missouri, hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST
: Pursuant to authority expressly vested in the Board of Trustees in the Amended and
Restated Declaration of Trust, as amended (the
Declaration
), the Trustees have duly classified
and designated 6,000,000 Preferred Shares of the Trust as 5.75% Series C Cumulative Convertible
Preferred Shares, $0.01 par value per share, of the Trust (
Series C Preferred Shares
).
SECOND
: The preferences, rights, voting powers, restrictions, limitations as to dividends and
other distributions, qualifications and terms or conditions of the Series C Preferred Shares are as
follows, in addition to those set forth in the Declaration. Capitalized terms used in this ARTICLE
SECOND which are defined in the Declaration and not otherwise defined herein are used herein as so
defined in the Declaration. Certain additional capitalized terms used in this ARTICLE SECOND are
used as defined in Section 15 below, which definitions shall apply only to Series C Preferred
Shares and shall not affect the definition of such terms as used or as otherwise defined with
respect to other series of Preferred Shares or elsewhere in the Declaration.
5.75% Series C Cumulative Convertible Preferred Shares, $0.01 par value per share
1.
Designation and Number
. A series of Preferred Shares, designated the 5.75% Series C
Cumulative Convertible Preferred Shares, $0.01 par value per share (the
Series C Preferred
Shares
), is hereby established. The number of authorized Series C Preferred Shares is 6,000,000.
2.
Relative Seniority
. In respect of rights to receive dividends and to participate in
distributions or payments in the event of any liquidation, dissolution or winding up of the Trust,
the Series C Preferred Shares shall rank (i) senior to the Common Shares and any other class or
series of Shares of the Trust, the terms of which specifically provide that such class or series
ranks, as to rights to receive dividends and to participate in distributions or payments in the
event of any liquidation, dissolution or winding up of the Trust, junior to the Series C Preferred
Shares, (ii) on a parity with the 9.50% Series A Cumulative Redeemable Preferred Shares, $0.01 par
value per share (the
Series A Preferred Shares
), the 7.75% Series B Cumulative Redeemable
Preferred Shares, $0.01 par value per share (the
Series B Preferred Shares
), and any other class
or series of Shares of the Trust, the terms of which specifically provide that such class or series
ranks, as to rights to receive dividends and to participate in distributions or payments in the
event of any liquidation, dissolution or winding up of the Trust, on a parity with the Series C
Preferred Shares, and (iii) junior to any class or series of Shares of the Trust, the terms of
which specifically provide that such class or series ranks, as to rights to receive dividends and
to participate in distributions or payments in the event of any liquidation, dissolution or winding
up of the Trust, senior to the Series C Preferred Shares. For the avoidance of doubt, debt
securities of the Trust which are convertible into or exchangeable for Shares of the Trust or any
other debt securities of the Trust do not constitute a class or series of Shares for purposes of
this Section 2.
3.
Dividends and Distributions
.
(a) Subject to the preferential rights of the holders of any class or series of Shares of the
Trust ranking senior to the Series C Preferred Shares as to dividends or distributions, the holders
of the then outstanding Series C Preferred Shares shall be entitled to receive, when and as
authorized by the Trustees and declared by the Trust, out of any funds legally available therefor,
cumulative cash distributions at a rate of 5.75% of the $25.00 liquidation preference per year
(equivalent to $1.4375 per share per year) (the
Distribution Rate
). Such distributions shall
accrue and be cumulative from December 22, 2006 (the
Original Issue Date
), and will be payable
quarterly in arrears in cash on the fifteenth day of each January, April, July and October
beginning on January 15, 2007 (each such day being hereinafter called a
Distribution Payment
Date
); provided that if any Distribution Payment Date is not a Business Day (as hereinafter
defined), then the distribution which would otherwise have been payable on such Distribution
Payment Date may be paid on the next succeeding Business Day with the same force and effect as if
paid on such Distribution Payment Date, and no interest or additional distributions or other sums
shall accrue on the amount so
payable from such Distribution Payment Date to such next succeeding Business Day. The amount
of any distribution payable for any full quarterly period or portion thereof shall be computed on
the basis of a 360-day year of twelve 30-day months (it being understood that the first
distribution will be for less than a full quarter). Distributions shall be payable to holders of
record as they appear in the share records of the Trust at the close of business on the applicable
record date (each, a
Distribution Record Date
), which shall be a date designated by the Trustees
for the payment of distributions that is not more than 60 nor less than 10 days prior to the
applicable Distribution Payment Date.
(b) Distributions on the Series C Preferred Shares shall accrue and be cumulative, whether or
not (i) the Trust has earnings, (ii) there are funds legally available for the payment of such
distributions or (iii) such distributions have been declared or authorized.
(c) If Series C Preferred Shares are outstanding, no full distributions shall be declared or
paid or set apart for payment on any other class or series of Shares of the Trust ranking, as to
distributions, on a parity with the Series C Preferred Shares for any period, unless the full
cumulative distributions on the Series C Preferred Shares have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set apart for payment
for all past distribution periods. When distributions are not paid in full (or a sum sufficient for
such full payment is not so set apart) upon the Series C Preferred Shares and the Shares of any
other class or series ranking on a parity as to distributions with the Series C Preferred Shares,
all distributions declared upon Series C Preferred Shares and any such other class or series of
Shares shall in all cases bear to each other the same ratio that accrued distributions per share on
the Series C Preferred Shares and such other class or series of Shares (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods if such other class
or series does not have a cumulative distribution) bear to each other.
(d) Unless full cumulative distributions on the Series C Preferred Shares have been or
contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for all past distribution periods, no distributions (other than in Common
Shares or shares ranking junior to the Series C Preferred Shares as to distributions or upon
liquidation, dissolution or winding up of the Trust, or options, warrants or rights to subscribe
for or purchase Common Shares or such junior Shares) shall be declared or paid or set apart for
payment and no other distribution shall be declared or made upon the Common Shares or any other
Shares ranking junior to the Series C Preferred Shares as to distributions or on liquidation,
dissolution or winding up of the Trust, nor shall any Common Shares or any other such Shares
ranking junior to or on parity with the Series C Preferred Shares as to distributions or upon
liquidation be redeemed, purchased or otherwise acquired for any consideration (or any moneys be
paid to or made available for a sinking fund for the redemption of any such Shares) by the Trust
except (i) by conversion into or exchange for Common Shares or such junior Shares, (ii) by
redemption, purchase or other acquisition of Common Shares made for purposes of an incentive,
benefit or share purchase plan of the Trust or any of its subsidiaries for officers, Trustees or
employees or others performing or providing similar services, and (iii) for redemptions, purchases
or other acquisitions by the Trust, whether pursuant to any provision of the Declaration or
otherwise, for the purpose of preserving the Trusts status as a REIT for federal income tax
purposes.
(e) No interest, or sum of money in lieu thereof, shall be payable in respect of any
distribution payment or payments on Series C Preferred Shares which may be in arrears, and the
holders of Series C Preferred Shares are not entitled to any distributions, whether payable in
cash, securities or other property, in excess of the full cumulative distributions described in
this Section 3. Except as otherwise expressly provided herein, the Series C Preferred Shares shall
not be entitled to participate in the earnings or assets of the Trust.
(f) Any distribution payment made on the Series C Preferred Shares shall be first credited
against the earliest accrued but unpaid distribution due with respect to such Shares which remains
payable. Any cash distributions paid in respect of Series C Preferred Shares, including any portion
thereof which the Trust elects to designate as capital gain dividends (as defined in Section 857
(or any successor provision) of the Internal Revenue Code) or as a return of capital, shall be
credited to the cumulative distributions on the Series C Preferred Shares.
(g) No distributions on the Series C Preferred Shares shall be authorized by the Trustees or
be paid or set apart for payment by the Trust at such time as the terms and provisions of any
agreement of the Trust, including any agreement relating to its indebtedness, directly or
indirectly prohibit authorization, payment or setting apart for payment or provide that such
authorization, payment or setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration, payment or setting apart for payment shall be restricted or
prohibited by law.
- 2 -
(h) The Trust shall remain entitled to receive and retain any interest or other earnings on
any money set aside for the payment of distributions on Series C Preferred Shares and holders
thereof shall have no claim to such interest or other earnings. Any funds for the payment of
distributions on Series C Preferred Shares which have been set apart by the Trust and which remain
unclaimed by the holders of the Series C Preferred Shares entitled thereto on the first anniversary
of the applicable Distribution Payment Date, or other distribution payment date, shall revert and
be repaid to the general funds of the Trust, and thereafter the holders of the Series C Preferred
Shares entitled to the funds which have reverted or been repaid to the Trust shall look only to the
general funds of the Trust for payment, without interest or other earnings thereon.
4.
Liquidation Rights
.
(a) Upon any voluntary or involuntary liquidation, dissolution or winding up of the Trust,
before any distribution or payment shall be made to the holders of any Common Shares or any other
Shares ranking junior to the Series C Preferred Shares as to rights to participate in distributions
or payments in the event of any liquidation, dissolution or winding up of the Trust, but subject to
the preferential rights of holders of any class or series of Shares ranking senior to the Series C
Preferred Shares as to rights to participate in distributions or payments in the event of any
liquidation, dissolution of winding up of the Trust, the holders of Series C Preferred Shares shall
be entitled to receive, out of assets of the Trust legally available for distribution to
shareholders, liquidating distributions in cash or property at its fair market value as determined
by the Trustees in the amount of $25.00 per Series C Preferred Share, plus an amount equal to all
distributions accrued and unpaid thereon (whether or not declared).
(b) After payment of the full amount of the liquidating distributions to which they are
entitled, the holders of Series C Preferred Shares will have no right or claim to any of the
remaining assets of the Trust.
(c) In the event that upon any voluntary or involuntary liquidation, dissolution or winding up
of the Trust, the available assets of the Trust are insufficient to pay the full amount of the
liquidating distributions on all outstanding Series C Preferred Shares and the full amounts payable
as liquidating distributions on all Shares of other classes or series of Shares of the Trust
ranking on a parity with the Series C Preferred Shares as to rights to participate in distributions
or payments in the event of any liquidation, dissolution or winding up of the Trust, then the
holders of the Series C Preferred Shares and all other such classes or series of Shares shall share
ratably in any such distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be respectively entitled.
(d) For purposes of this Section 4, neither the sale, lease, transfer or conveyance of all or
substantially all of the property or business of the Trust, nor the merger or consolidation of the
Trust into or with any other entity or the merger or consolidation of any other entity into or with
the Trust or a statutory share exchange by the Trust, shall be deemed to be a dissolution,
liquidation or winding up of the Trust.
(e) In determining whether a distribution (other than upon voluntary or involuntary
liquidation), by distribution, redemption or other acquisition of Shares or otherwise, is permitted
under Maryland law, amounts that would be needed, if the Trust were to be dissolved at the time of
the distribution, to satisfy the preferential rights upon dissolution of the holders of Series C
Preferred Shares will not be added to the Trusts total liabilities.
5.
Redemption
.
(a) The Series C Preferred Shares are not subject to mandatory or optional redemption or
repurchase, except as otherwise provided in Sections 5(b) and (c) below and except in certain
circumstances as set forth in Section 10 below, the Trust may not repurchase or redeem Series C
Preferred Shares.
(b) The Trust may, at its option, redeem or repurchase at any time all or from time to time
any Series C Preferred Shares necessary to preserve the Trusts qualification as a real estate
investment trust, which determination shall be made by the Board of Trustees in its sole
discretion, for cash at a redemption price per share equal to $25.00, together with all accrued and
unpaid distributions to the date fixed for redemption.
- 3 -
(c) For the avoidance of doubt, the provisions of Section 5(a) above shall not limit any
direct or indirect purchase or acquisition by the Trust of all or any Series C Preferred Shares on
the open market, by tender, or by privately negotiated transactions.
6.
Voting Rights
. Notwithstanding anything to the contrary contained in the
Declaration, except as set forth below in this Section 6, the holders of the Series C Preferred
Shares shall not be entitled to vote at any meeting of the shareholders for election of Trustees or
for any other purpose or otherwise to participate in any action taken by the Trust or the
shareholders thereof, or to receive notice of any meeting of shareholders (except for such notices
as may be expressly required by law).
(a) At any time distributions on the Series C Preferred Shares shall be in arrears for six or
more quarterly periods, whether or not the quarterly periods are consecutive, the holders of Series
C Preferred Shares (voting separately as a class with all other series of Preferred Shares of the
Trust upon which like voting rights have been conferred and are exercisable) will be entitled to
vote for the election of two additional Trustees of the Trust at the next annual meeting of
shareholders, or at a special meeting of shareholders called for that purpose, and for those or
other replacement Trustees at each subsequent meeting (and the number of Trustees then constituting
the Board of Trustees will automatically increase by two, if not already increased by two by reason
of the election of Trustees by the holders of such Preferred Shares), until all distributions
accumulated on Series C Preferred Shares for the past Distribution Periods shall have been fully
paid or declared and a sum sufficient for the payment thereof set apart for payment. For the
avoidance of doubt, and by means of example, in the event distributions on the Series A Preferred
Shares, Series B Preferred Shares and Series C Preferred Shares shall each be in arrears for six or
more quarterly periods, the holders of Series A Preferred Shares, Series B Preferred Shares and
Series C Preferred Shares (and the holders of all other series of Preferred Shares of the Trust
upon which like voting rights have been conferred and are exercisable) shall be entitled to vote
for the election of two additional Trustees in the aggregate, not six or more additional Trustees.
(i) Upon the full payment of all such distributions accumulated on Series C Preferred
Shares for the past Distribution Periods or the declaration in full thereof and the Trusts
setting aside a sum sufficient for the payment thereof, the right of the holders of Series C
Preferred Shares to elect such two Trustees shall cease, and (unless there are one or more
other series of Preferred Shares of the Trust upon which like voting rights have been
conferred and are exercisable) the term of office of such Trustees previously so elected
shall automatically terminate and the authorized number of Trustees of the Trust will
thereupon automatically return to the number of authorized Trustees otherwise in effect, but
subject always to the same provisions for the reinstatement and divestment of the right to
elect two additional Trustees in the case of any such future distribution arrearage.
(ii) If at any time when the voting rights conferred upon the Series C Preferred Shares
pursuant to this Section 6(a) are exercisable any vacancy in the office of a Trustee elected
pursuant to this Section 6(a) shall occur, then such vacancy may be filled only by the
written consent of the remaining such Trustee or by vote of the holders of record of the
outstanding Series C Preferred Shares and any other series of Preferred Shares of the Trust
upon which like voting rights have been conferred and are exercisable and which are entitled
to vote as a class with the Series C Preferred Shares in the election of Trustees pursuant
to this Section 6(a).
(iii) Any Trustee elected or appointed pursuant to this Section 6(a) may be removed
only by the holders of the outstanding Series C Preferred Shares and any other series of
Preferred Shares of the Trust upon which like voting rights have been conferred and are
exercisable and which are entitled to vote as a class with the Series C Preferred Shares in
the election of Trustees pursuant to this Section 6(a), and may not be removed by the
holders of the Common Shares.
(iv) The term of any Trustees elected or appointed pursuant to this Section 6(a) shall
be from the date of such election or appointment and their qualification until the next
annual meeting of the shareholders and until their successors are duly elected and qualify,
except as otherwise provided above in this Section 6(a).
(b) So long as any Series C Preferred Shares remain outstanding, the Trust shall not, without
the affirmative vote or consent of the holders of at least two-thirds of the Series C Preferred
Shares outstanding at the time, given in person or by proxy, either in writing or at a meeting (the
holders of Series C Preferred Shares voting separately
- 4 -
as a class), (i) authorize or create, or increase the number of authorized or issued shares
of, any class or series of Shares ranking senior to the Series C Preferred Shares with respect to
payment of distributions or the distribution of assets upon liquidation, dissolution or winding up
of the Trust, or reclassify any authorized Shares of the Trust into any such Shares, or create,
authorize or issue any obligation or security convertible into or evidencing the right to purchase
any such Shares, or (ii) amend, alter or repeal the provisions of the Declaration or these terms of
the Series C Preferred Shares, whether by merger, consolidation or otherwise, so as to materially
and adversely affect any right, preference, privilege or voting power of the Series C Preferred
Shares; provided, however, that any increase in the number of authorized Preferred Shares, any
issuance of or increase in the number of Series C Preferred Shares or any creation or issuance of
or increase in the number of authorized shares of any class or series of Preferred Shares which
rank on a parity with the Series C Preferred Shares with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up of the Trust or which are Junior
Shares shall not be deemed to materially and adversely affect the rights, preferences, privileges
or voting powers of the Series C Preferred Shares.
(c) The voting provisions set forth in clauses (a) and (b) above will not apply if, at or
prior to the time when the act with respect to which a vote would otherwise be required shall be
effected, (i) all outstanding Series C Preferred Shares shall have been redeemed or repurchased by
the Trust or (ii) all outstanding Series C Preferred Shares shall have been called for redemption
or the Trust shall have exercised its election to repurchase all outstanding Series C Preferred
Shares and in either case sufficient funds shall have been deposited in trust pursuant to the
provisions of the terms of the Series C Preferred Shares to effect the redemption or repurchase, as
applicable.
(d) On each matter submitted to a vote of the holders of Series C Preferred Shares or on which
the holders of Series C Preferred Shares are otherwise entitled to vote as provided herein, each
Series C Preferred Share shall be entitled to one vote, except that when Shares of any other class
or series of Preferred Shares of the Trust have the right to vote with the Series C Preferred
Shares as a single class on any matter, the Series C Preferred Shares and the Shares of each such
other class or series will have one vote for each $25.00 of liquidation preference.
7.
Conversion
. Series C Preferred Shares will be convertible, at the option of the
Trust, into either (1) a number of Common Shares based upon the applicable Conversion Rate, or (2)
an amount of cash and Common Shares, in each case on and subject to the terms and conditions set
forth below in this Section 7 and in Sections 8, 9 and 10 below (such payment referred to as the
Conversion Payment
).
(a)
Holder Conversion Right
.
(i) Subject to and upon compliance with the provisions of this Section 7, a holder of
any share or shares of Series C Preferred Shares shall have the right, at its option, to
convert all or any portion of such holders outstanding Series C Preferred Shares (the
Holder Conversion Right
), subject to the conditions described below, into a number of
fully paid and non-assessable Common Shares that are issuable initially at a conversion rate
of 0.3504 Common Shares per $25.00 liquidation preference of Series C Preferred Shares
(subject to adjustment in accordance with the provisions of Section 8 and Section 9 hereof,
the
Conversion Rate
); provided, however, that the Trust shall have the right to deliver
either solely Common Shares or cash and Common Shares, if any, in accordance with the
provisions of Section 7(d) and the other provisions of this Section 7. The
Conversion
Price
at any time shall be equal to $25.00 divided by the Conversion Rate at such time.
(ii) To exercise the Holder Conversion Right, a holder of Series C Preferred Shares
must surrender to the Trust at its principal office or at the office of the Transfer Agent,
as may be designated by the Board of Trustees, the certificate or certificates, if any, for
the Series C Preferred Shares to be converted accompanied by a written notice stating that
the holder of Series C Preferred Shares elects to convert all or a specified whole number of
those shares pursuant to the Holder Conversion Right and specifying the name or names in
which the holder wishes the certificate or certificates for the Common Shares, if any, to be
issued or in which ownership of such Common Shares, if uncertificated, are to be registered
(
Conversion Notice
).
(iii) Depending upon the form of Conversion Payment elected to be delivered by the
Trust pursuant to the provisions of this Section 7, the Trust will deliver Common Shares
and/or cash, if any, to which a holder of Series C Preferred Shares shall be entitled
pursuant to and in accordance with the provisions of this Section 7. If any Common Shares
are to be delivered and (A) if Common Shares to be issued upon
- 5 -
such conversion are certificated, the Trust shall issue and shall deliver or cause to
be issued and delivered to such holder, or to such other Person on such holders written
order (I) certificates evidencing the number of validly issued, fully paid and
non-assessable full Common Shares to which the holder of the shares of Series C Preferred
Shares being converted, or the holders transferee, shall be entitled, and (II) if less than
the full number of such Series C Preferred Shares are being converted, if the Series C
Preferred Shares are certificated, a new certificate or certificates, of like tenor, for the
number of Series C Preferred Shares evidenced by the surrendered certificate or
certificates, less the number of shares being converted (or otherwise the Trust shall cause
the number of Series C Preferred Shares not being converted to remain registered in the name
of such holder), or (B) if Common Shares to be issued upon such conversion are not
certificated, (I) the Trust shall cause the number of validly issued, fully paid and
non-assessable full Common Shares to which a holder of shares of Series C Preferred Shares
being converted, or a holders transferee, shall be entitled to be registered in the name of
such holder or such transferee, as applicable, and (II) if less than the full number of such
Series C Preferred Shares are being converted, if the Series C Preferred Shares are
certificated, a new certificate or certificates, of like tenor, for the number of Series C
Preferred Shares evidenced by the surrendered certificate or certificates, less the number
of shares being converted (or otherwise the Trust shall cause the number of Series C
Preferred Shares not being converted to remain registered in the name of such holder), and
(C) if a fractional interest in respect of a Common Share arising upon such conversion is to
be settled in cash as provided in Section 7(c)(ii) below, a check or other transfer of funds
for the cash settlement amount.
(iv) In lieu of the foregoing procedure, to the extent Series C Preferred Shares are
held by DTC in global form, the beneficial owner of Series C Preferred Shares shall comply
with the procedures of DTC in order to convert the owners beneficial interest in such
Series C Preferred Shares.
(v) Each conversion pursuant to exercise of the Holder Conversion Right shall be deemed
to have been made at the close of business on the date of giving the Conversion Notice and
of surrendering the certificate or certificates, if any, evidencing the Series C Preferred
Shares to be converted (the
Conversion Date
) so that the rights of the holder thereof as
to the Series C Preferred Shares being converted shall cease except for the right to receive
the Conversion Payment and, if applicable, cash in lieu of fractional Common Shares issuable
upon such conversion, and, if applicable, the Person entitled to receive Common Shares shall
be treated for all purposes as having become the record holder of those Common Shares at
that time.
(vi) If the Trust elects to deliver the Conversion Payment to which a holder of Series
C Preferred Shares shall be entitled solely in the form of Common Shares, then the Trust
shall deliver the Common Shares in accordance with the provisions of this Section 7 as
promptly as practicable after the Conversion Date and after the surrender of the
certificates or certificates, if any, for the Series C Preferred Shares in accordance with
Section 7(a)(ii), the receipt of the Conversion Notice and payment of all required transfer
taxes, if any, or the demonstration to the Trusts satisfaction that those taxes have been
paid. If the Trust elects to deliver the Conversion Payment to which a holder of Series C
Preferred Shares shall be entitled in the form of cash and Common Shares, if any, then the
Trust shall deliver such cash and Common Shares, if any, pursuant to the provisions of this
Section 7, as applicable, as promptly as practicable following the third Trading Day after
the Cash Settlement Averaging Period, and after the surrender of the certificates or
certificates, if any, for the Series C Preferred Shares in accordance with Section 7(a)(ii),
the receipt of the Conversion Notice and payment of all required transfer taxes, if any, or
the demonstration to the Trusts satisfaction that those taxes have been paid.
(vii) If a holder of Series C Preferred Shares has exercised its Fundamental Change
Conversion Right with respect to Series C Preferred Shares, such Series C Preferred Shares
may not be converted pursuant to exercise of a Holder Conversion Right unless such holder
has timely submitted notice withdrawing the Series C Preferred Shares from conversion
pursuant to the Fundamental Change Conversion Right pursuant to Section 10. If the Trust
elected to repurchase Series C Preferred Shares subject to the exercise of a Fundamental
Change Conversion Right in accordance with Section 10, such holders Holder Conversion Right
with respect to the Series C Preferred Shares so subject to repurchase shall expire unless
the Trust or the Transfer Agent has received the related Conversion Notice and the
certificate or certificates, if any, for the Series C Preferred Shares, being converted (or,
if applicable, the beneficial owner of such Series C Preferred Shares has complied with the
procedures of DTC for the conversion of such Series C Preferred Shares) at or
- 6 -
prior to 5:00 PM, New York City time, on the Business Day immediately preceding the
Fundamental Change Conversion Date, unless the Trust defaults on the payment of the
Fundamental Change Purchase Price.
(b)
Company Conversion Option
.
(i) On or after January 20, 2012, the Trust shall have the option to convert some or
all of the outstanding Series C Preferred Shares into that number of Common Shares that are
issuable at the then applicable Conversion Rate (the
Company Conversion Option
). The Trust
may exercise the Company Conversion Option only if the Closing Sale Price (as hereinafter
defined) of the Common Shares equals or exceeds 135% of the then applicable Conversion Price
for at least 20 Trading Days in a period of 30 consecutive Trading Days (including the last
Trading Day of such period), ending on the Trading Day immediately prior to the Trusts
issuance of a press release announcing its intent to exercise the Company Conversion Option
in accordance with Section 7(b)(iii).
(ii) If the Trust shall convert less than all of the outstanding Series C Preferred
Shares, the Transfer Agent shall select the Series C Preferred Shares to be converted by
lot, on a pro rata basis or in accordance with any other method the Transfer Agent considers
fair and appropriate. The Trust may convert the Series C Preferred Shares only in a whole
number of shares. If a portion of a holders Series C Preferred Shares is selected for
partial conversion by the Trust and the holder exercises the Holder Conversion Right to
convert a portion of such Series C Preferred Shares, the number of Series C Preferred Shares
subject to conversion by the Trust pursuant to the Company Conversion Option shall be
reduced by the number of shares that the holder converted by exercising the Holder
Conversion Right.
(iii) To exercise the Company Conversion Option right set forth in this Section 7(b),
the Trust shall issue a press release for publication to the Dow Jones & Company, Inc.,
Business Wire or Bloomberg Business News (or, if such organizations are not in existence at
the time of issuance of such press release, such other news or press organization as is
reasonably calculated to broadly disseminate the relevant information to the public) prior
to the opening of business on the first Trading Day following any date on which the
conditions set forth in Section 7(b)(i) shall have been satisfied, announcing the Trusts
intention to exercise the Company Conversion Option and the form of Conversion Payment. The
Trust shall also give notice by mail or by publication (with subsequent prompt notice by
mail) to the holders of the Series C Preferred Shares (not more than four (4) Trading Days
after the date of the press release) announcing the Trusts intention to exercise the
Company Conversion Option (the
Company Conversion Option Notice
). The effective date for
any Company Conversion Option (the
Company Conversion Option Date
) shall be on the date
that is selected by the Trust that is not longer than five (5) Trading Days after the date
on which the Trust issues such press release. In addition to any information required by
applicable law or regulation, the Company Conversion Option Notice and the press release and
notice with respect to the exercise of the Company Conversion Option shall state, as
appropriate: (A) the Company Conversion Option Date; (B) the form of Conversion Payment the
Trust elects to deliver upon conversion (unless the Trust has irrevocably elected to waive
its right to deliver the Conversion Payment solely in Common Shares as provided in Section
7(d)); (C) if known, the number of Common Shares, if any, to be issued upon conversion of
each Series C Preferred Share; (D) the number of shares of Series C Preferred Shares to be
converted; and (E) that distributions on the Series C Preferred Shares to be converted shall
cease to accrue on the Company Conversion Option Date.
(iv) To receive the Conversion Payment to which a holder of Series C Preferred Shares
shall be entitled in the case of a Company Conversion Option, a holder of Series C Preferred
Shares must surrender to the Trust at its principal office or at the office of the Transfer
Agent, as may be designated by the Board of Trustees, the certificate or certificates, if
any, for the Series C Preferred Shares to be converted accompanied by a written notice
specifying the name or names in which the holder wishes to the certificate or certificates
for the Common Shares, if any, to be issued or in which ownership of such Common Shares, if
uncertificated, are to be registered.
(v) Depending upon the form of Conversion Payment elected to be delivered by the Trust
pursuant to the provisions of this Section 7, the Trust will deliver Common Shares and/or
cash, if any, to which a holder of Series C Preferred Shares shall be entitled pursuant to
and in accordance with the provisions of this Section 7. If any Common Shares are to be
delivered and (A) if Common Shares to be issued upon
- 7 -
such conversion are certificated, (x) the Trust shall issue and shall deliver or cause
to be issued and delivered to such holder, or to such other Person on such holders written
order (I) certificates evidencing the number of validly issued, fully paid and
non-assessable full Common Shares to which a holder of shares of Series C Preferred Shares
being converted, or a holders transferee, shall be entitled, (II) if less than the full
number of such Series C Preferred Shares are being converted, if the Series C Preferred
Shares are certificated, a new certificate or certificates, of like tenor, for the number of
Series C Preferred Shares evidenced by the surrendered certificate or certificates, less the
number of shares being converted (or otherwise the Trust shall cause the number of Series C
Preferred Shares not being converted to remain registered in the name of such holder), or
(B) if Common Shares to be issued upon such conversion are not certificated, (I) the Trust
shall cause the number of validly issued, fully paid and non-assessable full Common Shares
to which a holder of shares of Series C Preferred Shares being converted, or a holders
transferee, shall be entitled to be registered in the name of such holder or such
transferee, as applicable, and (II) if less than the full number of such Series C Preferred
Shares are being converted, if the Series C Preferred Shares are certificated, a new
certificate or certificates, of like tenor, for the number of Series C Preferred Shares
evidenced by the surrendered certificate or certificates, less the number of shares being
converted (or otherwise the Trust shall cause the number of Series C Preferred Shares not
being converted to remain registered in the name of such holder), and (C) if a fractional
interest in respect of a Common Share arising upon such conversion is to be settled in cash
as provided in Section 7(c)(ii), a check or other transfer of funds for the cash settlement
amount.
(vi) In lieu of the foregoing procedure, to the extent Series C Preferred Shares are
held by DTC in global form, the beneficial owner of Series C Preferred Shares shall comply
with the procedures of DTC upon exercise of the Company Conversion Option in order to
convert the owners beneficial interest in such Series C Preferred Shares.
(vii) Each conversion pursuant to this Section 7(b) shall be deemed to have been made
at the close of business on the Company Conversion Option Date so that the rights of the
holder thereof as to the shares of Series C Preferred Shares being converted shall cease
except for the right to receive the Conversion Payment and, if applicable, cash in lieu of
fractional Common Shares issuable upon such conversion, and the Person entitled to receive
Common Shares shall be treated for all purposes as having become the record holder of those
Common Shares at that time.
(viii) If the Trust elects to deliver the Conversion Payment to which a holder of
Series C Preferred Shares shall be entitled solely in the form of Common Shares, then the
Trust shall deliver the Common Shares in accordance with the provisions of this Section 7
procedures as promptly as practicable after the Company Conversion Option Date and after the
surrender of the certificates or certificates, if any, for the Series C Preferred Shares in
accordance with Section 7(b)(iv), the receipt of the notice described in Section 7(b)(iv),
and payment of all required transfer taxes, if any, or the demonstration to the Trusts
satisfaction that those taxes have been paid. If the Trust elects to deliver the Conversion
Payment to which a holder of Series C Preferred Shares shall be entitled in the form of cash
and Common Shares, if any, then the Trust shall deliver such cash and Common Shares, if any,
pursuant to the pursuant to this Section 7 as applicable, as promptly as practicable
following the third Trading Day after the Cash Settlement Averaging Period, and after the
surrender of the certificates or certificates, if any, for the Series C Preferred Shares in
accordance with Section 7(b)(iv), the receipt of the notice described in Section 7(b)(iv)
and payment of all required transfer taxes, if any, or the demonstration to the Trusts
satisfaction that those taxes have been paid.
(ix) In case any Series C Preferred Share is to be converted pursuant to this Section
7(b), the holders right to voluntarily convert such Series C Preferred Share pursuant to
exercise of the Holder Conversion Right or the Fundamental Change Conversion Right shall
terminate at 5:00 p.m., New York City time, on the Business Day immediately preceding the
Company Conversion Option Date.
(c)
General Provisions for Conversions
.
(i) If more than one Series C Preferred Share shall be surrendered for conversion by
the same holder or subject to exercise of the Company Conversion Option at the same time,
the number of full Common Shares issuable on conversion of those shares of Series C
Preferred Shares shall be computed on the basis of the total number of shares of Series C
Preferred Shares so surrendered.
- 8 -
(ii) In connection with the conversion of any Series C Preferred Shares, the Trust may
elect not to issue fractional Common Shares, in which case the Trust shall pay a cash
adjustment in respect of any fractional interest in an amount equal to the fractional
interest, multiplied by the Closing Sale Price of the Common Shares on the Trading Day
immediately prior to the Conversion Date or the Company Conversion Option Date, as
applicable.
(iii) In case the Conversion Notice or holders order pursuant to Section 7(b)(v)
specifies that the Common Shares issuable upon conversion of Series C Preferred Shares are
to be issued or registered in a name or names other than that of the registered holder of
Series C Preferred Shares, the notice or order shall be accompanied by payment of all
transfer taxes payable upon the issuance of Common Shares in that name or names. Other than
those transfer taxes payable pursuant to the preceding sentence, the Trust shall pay any
documentary, stamp or similar issue or transfer taxes that may be payable in respect of any
issuance or delivery of Common Shares upon conversion of Series C Preferred Shares pursuant
to this Section 7.
(iv) A holder of Series C Preferred Shares is not entitled to any rights of a holder of
Common Shares until that holder has converted its Series C Preferred Shares, and only to the
extent such Series C Preferred Shares have been or are deemed to have been converted to
Common Shares in accordance with the provisions of this Section 7.
(v) The Trust shall, prior to issuance of any share of Series C Preferred Shares, and
from time to time as may be necessary, reserve and keep available, free from preemptive
rights, out of its authorized but unissued shares of beneficial interest, for the purpose of
effecting the conversion of the Series C Preferred Shares pursuant to this Section 7, such
number of its duly authorized Common Shares as shall from time to time be sufficient to
effect the conversion pursuant to this Section 7 of all shares of Series C Preferred Shares
then outstanding into such Common Shares at any time (assuming that, at the time of the
computation of such number of Common Shares, all such shares of Series C Preferred Shares
would be held by a single holder). The Trust covenants that all Common Shares that may be
issued upon conversion of Series C Preferred Shares shall, upon issue, be validly issued,
fully paid and nonassessable and free from all liens and charges and, except as provided in
Section 7(c)(iii), taxes with respect to the issue thereof and not subject to any preemptive
rights. Before the delivery of any Common Shares that the Trust shall be obligated to
deliver upon conversion of any shares of the Series C Preferred Shares, the Trust shall
comply with all federal and state laws and regulations applicable to such conversion.
(d)
Payment Upon Conversion
(i) Upon conversion pursuant to and in accordance with the provisions of this Section 7
(whether upon exercise of a Company Conversion Option or exercise of a Holder Conversion
Right), the Trust shall deliver, at the option of the Board of Trustees, either (1) a number
of Common Shares based upon the applicable Conversion Rate, or (2) an amount of cash and
common shares as follows:
|
--
|
|
cash in an amount equal to the lesser of (a) the Conversion
Value and (b) the $25.00 liquidation preference, and
|
|
|
--
|
|
if the Conversion Value is greater than the $25.00 liquidation
preference, a number of Common Shares equal to the difference between the
Conversion Value and the $25.00 liquidation preference, divided by the average
of the Closing Sale Price of the Common Shares during the Cash Settlement
Averaging Period.
|
(ii) At any time, the Board of Trustees may irrevocably waive, in its sole discretion,
by notice to the holders of the Series C Preferred Shares, the Trusts right to satisfy its
conversion obligation by payment solely in Common Shares pursuant to clause (1) of Section
7(d)(i) above. The Trust shall not be permitted to elect the payment option in clause (1)
of Section 7(d)(i) above if the Trust has elected to waive its right to do so. If the Trust
has irrevocably waived such right, then the Trust shall give notice of such waiver by mail
or publication (with subsequent prompt notice by mail) to holders of Series C Preferred
Shares, and such waiver shall be effective as of the date specified in such notice, or if no
date is specified, then as of the date of such notice.
- 9 -
(iii) If the Trust shall exercise the Company Conversion Option, then the press release
and the Company Option Conversion Notice pursuant to Section 7(b)(iii) will state the form
of Conversion Payment the Trust elects to deliver upon conversion (unless the Trust has
irrevocably elected to waive its right to deliver the Conversion Payment solely in Common
Shares as provided in clause (1) of Section 7(d)(i)); and such payment election shall apply
to all such Series C Preferred Shares to be converted pursuant to the such Company
Conversion Option.
(iv) If the Trust receives a Conversion Notice from a holder of Series C Preferred
Shares in accordance with Section 7(a)(ii), then the Trust shall notify the relevant
holders of Series C Preferred Shares within two scheduled Trading Days following the
Conversion Date of the form of Conversion Payment the Trust elects to deliver upon
conversion (unless the Trust has irrevocably elected to waive its right to deliver the
Conversion Payment solely in Common Shares as provided in clause (1) of Section 7(d)(i)
above). All holders of Series C Preferred Shares converting on the same Trading Day pursuant
to a Holder Conversion Right will be treated in the same manner. The Trust shall not have
any obligation to satisfy its conversion obligation arising on different Trading Days in the
same manner. For the avoidance of doubt, the Trust may elect to choose on one Trading Day to
deliver the Conversion Payment solely in the form of Common Shares pursuant to clause (1) of
Section 7(d)(i) above, and to choose on another Trading Day to settle in cash and/or common
shares pursuant to clause (2) of Section 7(d)(i) above.
(e)
Payment of Distributions upon Conversion
.
(i)
Holder Conversion Right
.
|
(A)
|
|
If a holder of Series C Preferred Shares exercises its Holder
Conversion Right, upon delivery of the Series C Preferred Shares for
conversion, those Series C Preferred Shares shall cease to cumulate
distributions as of the close of business on the Conversion Date and the holder
shall not receive any cash payment representing accrued and unpaid
distributions on the Series C Preferred Shares delivered for conversion, except
in those limited circumstances discussed in this Section 7(e)(i). Except as
provided herein, the Trust shall make no payment for accrued and unpaid
distributions, whether or not in arrears, on Series C Preferred Shares
converted at a holders election pursuant to a Holder Conversion Right, or for
distributions on Common Shares issued upon such conversion.
|
|
|
(B)
|
|
If the Trust receives a Conversion Notice before the close of
business on a Distribution Record Date, the holder shall not be entitled to
receive any portion of the distribution payable on such converted Series C
Preferred Shares on the corresponding Distribution Payment Date.
|
|
|
(C)
|
|
If the Trust receives a Conversion Notice after the
Distribution Record Date but prior to the corresponding Distribution Payment
Date, the holder of Series C Preferred Shares on the Distribution Record Date
shall receive on that Distribution Payment Date accrued distributions on those
Series C Preferred Shares, notwithstanding the conversion of those Series C
Preferred Shares prior to that Distribution Payment Date. However, at the time
that such holder surrenders the Series C Preferred Shares for conversion, the
holder shall pay to the Trust an amount equal to the distribution that has
accrued and that shall be paid on the related Distribution Payment Date.
|
|
|
(D)
|
|
A holder of Series C Preferred Shares on a Distribution Record
Date who exercises its Holder Conversion Right and converts such Series C
Preferred Shares into Common Shares on or after the corresponding Distribution
Payment Date shall be entitled to receive the distribution payable on such
Series C Preferred Shares on such Distribution Payment Date, and the converting
holder need not include payment of the amount of such distribution upon
surrender for conversion of such Series C Preferred Shares.
|
(ii)
Company Conversion Option
.
- 10 -
|
(A)
|
|
If the Trust exercises the Company Conversion Option, whether
the Company Conversion Option Date is prior to, on or after the Distribution
Record Date for the current period, all unpaid distributions which are in
arrears as of the Company Conversion Option Date shall be payable to the holder
of the Series C Preferred Shares with respect to which the Company Conversion
Option has been exercised.
|
|
|
(B)
|
|
If the Trust exercises the Company Conversion Option and the
Company Conversion Option Date is a date that is after the close of business on
a Distribution Payment Date and prior to the close of business on the next
Distribution Record Date, the holder of Series C Preferred Shares with respect
to which the Company Conversion Option has been exercised shall not be entitled
to receive any portion of the distribution for such period on such converted
Series C Preferred Shares on the corresponding Distribution Payment Date.
|
|
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(C)
|
|
If the Trust exercises the Company Conversion Option and the
Company Conversion Option Date is a date that is on or after the close of
business on any Distribution Record Date and prior to the close of business on
the corresponding Distribution Payment Date, all distributions, including
accrued and unpaid distributions, whether or not in arrears, with respect to
the Series C Preferred Shares called for conversion on such date, shall be
payable on such Distribution Payment Date to the record holder of Series C
Preferred Shares if the record holder of such shares is the record holder of
such Shares on such Distribution Record Date.
|
(iii)
Fundamental Change Conversion Right
. The provisions set forth above in
this Section 7(e) shall not apply to Series C Preferred Shares which are converted into
Common Shares pursuant to the Fundamental Change Conversion Right or which are repurchased
by the Trust in lieu of such conversion pursuant to Section 10 below.
8.
Adjustments to Conversion Rate
(a) The Conversion Rate shall be adjusted from time to time by the Trust as follows:
(i) If Common Shares are issued as payment for distributions on Common Shares, the
Conversion Rate shall be adjusted based on the following formula:
CR
1
= CR
O
x OS
1
/OS
O
where,
|
|
|
|
|
CR
O
|
|
=
|
|
the Conversion Rate in effect immediately prior to such event
|
CR
1
|
|
=
|
|
the Conversion Rate in effect immediately after such event
|
OS
O
|
|
=
|
|
the number of Common Shares outstanding immediately prior to such event
|
OS
1
|
|
=
|
|
the number of Common Shares outstanding immediately after such event.
|
An adjustment made pursuant to this subsection (i) shall become effective on the date
immediately after the date fixed for the determination of shareholders entitled to receive such
distribution or other distribution. If any distribution described in this subsection (i) is
declared but not so paid or made, the Conversion Rate shall again be adjusted to the Conversion
Rate that would then be in effect if such dividend or distribution had not been declared.
(ii) If a share subdivision, combination or reclassification of Common Shares is effected, the
Conversion Rate shall be adjusted based on the following formula:
CR
1
= CR
O
x OS
1
/OS
O
where,
- 11 -
|
|
|
|
|
CR
O
|
|
=
|
|
the Conversion Rate in effect immediately prior to such event
|
CR
1
|
|
=
|
|
the Conversion Rate in effect immediately after such event
|
OS
O
|
|
=
|
|
the number of Common Shares outstanding immediately prior to such event
|
OS
1
|
|
=
|
|
the number of Common Shares outstanding immediately after such event.
|
An adjustment made pursuant to this subsection (ii) shall become effective on the date
immediately after the date on which such subdivision, combination or reclassification becomes
effective.
(iii) If any rights, warrants, options or other securities are issued to all or substantially
all of the holders of Common Shares entitling them for a period of not more than sixty (60) days
immediately following the record date for the distribution, to purchase or subscribe for Common
Shares, or securities convertible into Common Shares (which for such and similar purposes hereunder
shall be deemed also to include securities which are exchangeable or exercisable for Common
Shares), in either case at an exercise price per share or a conversion price per share less than
the Closing Sale Price per share of the Common Shares on the record date for such distribution, the
Conversion Rate shall be adjusted based on the following formula:
CR
1
= CR
O
x (OS
O
+X)/(OS
O
+Y)
where,
|
|
|
|
|
CR
O
|
|
=
|
|
the Conversion Rate in effect immediately prior to such event
|
CR
1
|
|
=
|
|
the Conversion Rate in effect immediately after such event
|
OS
O
|
|
=
|
|
the number of Common Shares outstanding immediately prior to such event
|
X
|
|
=
|
|
the total number of Common Shares issuable pursuant to such rights,
warrants, options or other securities
|
Y
|
|
=
|
|
the number of Common Shares equal to the quotient of (A) the aggregate
price payable to exercise of such rights, warrants, options or other
securities and (B) the average of the Closing Sale Prices of Common
Shares for the 10 consecutive Trading Days prior to the Business Day
immediately preceding the date of announcement for the issuance of
such rights, warrants, options, other securities or convertible
securities.
|
If, however, the application of the foregoing formula would result in a decrease in the
Conversion Rate, no adjustment to the Conversion Rate shall be made.
An adjustment made pursuant to this subsection (iii) shall be made successively whenever such
rights, warrants, options, other securities or convertible securities are issued, and shall become
effective on the day following the date of announcement of such issuance. If, at the end of the
period during which such rights, warrants, options, other securities or convertible securities are
exercisable or convertible, not all rights, warrants, options, other securities or convertible
securities have been exercised or converted, as the case may be, the adjusted Conversion Rate shall
be immediately readjusted to what it would have been based upon the number of additional Common
Shares actually issued (or the number of Common Shares actually issued upon conversion of
convertible securities actually issued).
For purposes of this subsection (iii), in determining whether such rights, warrants, options,
other securities or convertible securities entitle the holder to subscribe for or purchase or
exercise a conversion right for Common Shares at less than the average Closing Sale Price of the
Common Shares, and in determining the aggregate exercise or conversion price payable for such
Common Shares, there shall be taken into account any consideration received by the Trust for such
rights, warrants, options, other securities or convertible securities and any amount payable on
exercise or conversion thereof, with the value of such consideration, if other than cash, to be
determined by the Board of Trustees.
(iv) If any shares of the Trusts or any of the Trusts existing or future subsidiaries
shares of beneficial interest (other than Common Shares), evidences of indebtedness or other assets
(other than distributions covered by subsections (v) and (vi) below) or rights, warrants, options
or other securities or convertible securities which entitle the holder to subscribe for or purchase
or exercise a conversion right for securities of the Trust (other than those covered by subsection
(iii) above) (collectively, subject to such exclusions,
Distributed Assets
), the Conversion Rate
in effect immediately before the close of business on the ex-distribution date shall be adjusted,
based on the following formula:
- 12 -
CR
1
= CR
O
x SP
O
/(SP
O
FMV)
where
|
|
|
|
|
CR
O
|
|
=
|
|
the Conversion Rate in effect immediately prior to such distribution
|
CR
1
|
|
=
|
|
the Conversion Rate in effect immediately after such distribution
|
SP
O
|
|
=
|
|
the average of the Closing Sale Prices of Common Shares for the 10
consecutive Trading Days prior to the Business Day immediately
preceding the ex-distribution date for such distribution
|
FMV
|
|
=
|
|
the fair market value (as determined in good faith by the Board of
Trustees) of such Distributed Assets distributed with respect to
each outstanding Common Share on the record date for such
distribution.
|
Notwithstanding the foregoing, the Trust shall not adjust the Conversion Rate pursuant to this
paragraph for distributions of rights, warrants, options or other securities or convertible
securities, if adequate provision shall be made (as determined in good faith by the Board of
Trustees) so that the holder of each Series C Preferred Share shall have the right to receive on
the date, if any, on which such Series C Preferred Share is converted into Common Shares, the
amount of such Distributed Assets such holder of such Series C Preferred Share would have received
had such holder of such Series C Preferred Share owned a number of Common Shares equal to the
Conversion Rate on the record date for such distribution.
With respect to an adjustment pursuant to this subsection (iv) where there has been a payment
or distribution on Common Shares or capital shares of any class or series, or similar equity
interest, of or relating to a subsidiary or other business unit (a
spin-off
), the Conversion Rate
in effect immediately before the close of business on the ex-distribution date shall be increased,
based on the following formula instead of the formula set forth above in this subsection (iv):
CR
1
= CR
O
x (FMV
O
+ MP
O
)/MP
O
where,
|
|
|
|
|
CR
O
|
|
=
|
|
the Conversion Rate in effect immediately prior to such distribution
|
CR
1
|
|
=
|
|
the Conversion Rate in effect immediately after such distribution
|
FMV
O
|
|
=
|
|
the average of the Closing Sale Prices of the capital shares or
similar equity interest distributed to holders of Common Shares
applicable to one Common Share over the first 10 Trading Days after
the effective date of the spin-off
|
MP
O
|
|
=
|
|
the average of the Closing Sale Prices of Common Shares over the
first 10 consecutive Trading Days after the effective date of the
spin-off.
|
The adjustment to the Conversion Rate under the preceding paragraph with respect to a spin-off
shall occur on the tenth Trading Day from, and including, the effective date of the spin-off.
If any such distribution or distribution described in this subsection (iv) is declared but not
paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then
be in effect if such distribution had not been declared.
(v) If any cash dividend or distribution is paid or made during any of the Trusts quarterly
fiscal periods to all or substantially all of the holders of Common Shares in an aggregate amount
that, together with all other cash dividends and distributions made during such quarterly fiscal
period, exceeds the Distribution Threshold times the number of Common Shares outstanding on the
record date for such dividend or distribution, other than distributions covered by subsection (vi)
below, the Conversion Rate shall be adjusted based on the following formula:
CR
1
= CR
O
x SP
O
/(SP
O
C)
where,
- 13 -
|
|
|
|
|
CR
O
|
|
=
|
|
the Conversion Rate in effect immediately prior to the record date for such distribution
|
CR
1
|
|
=
|
|
the Conversion Rate in effect immediately after the record date for such distribution
|
SP
O
|
|
=
|
|
the average of the Closing Sale Prices of Common Shares for the 10 consecutive Trading
Days prior to the Business Day immediately preceding the Distribution Record Date of
such distribution
|
C
|
|
=
|
|
(A) in the case of a regular quarterly dividend or distribution, the amount in cash per
share the Trust distributes to holders of Common Shares that exceeds the Distribution
Threshold then in effect or (B) in any other case, the full amount of such dividend or
distribution.
|
An adjustment made pursuant to this subsection (v) shall become effective on the date
immediately after the record date for the determination of shareholders entitled to receive such
dividend or distribution. If any dividend or distribution described in this subsection (v) is
declared but not so paid or made, the Conversion Rate shall again be adjusted to the Conversion
Rate that would then be in effect if such distribution had not been declared.
The initial
Distribution Threshold
shall be $0.6875. In the event the Conversion Rate is
adjusted pursuant to this Section 8, other than an adjustment in respect of a regular quarterly
dividend or distribution pursuant to this subsection (v), the Distribution Threshold shall be
concurrently adjusted multiplying the Distribution Threshold in effect immediately before the
adjustment by a fraction, the numerator of which is the Conversion Rate in effect immediately
before the adjustment, and the denominator of which is the adjusted Conversion Rate.
(vi) If distributions of cash or other consideration by the Trust or any of its subsidiaries
in respect of a tender offer or exchange offer for Common Shares, where such cash and the value of
any such other consideration per Common Share validly tendered or exchanged exceeds the Closing
Sale Price per Common Share on the Trading Day next succeeding the last date on which tenders or
exchanges may be made pursuant to the tender or exchange offer (the
Expiration Date
and the last
time at which such tenders or exchanges could have been made on the Expiration Date being the
Expiration Time
) on the following formula:
CR
1
= CR
O
x (AC + (SP
1
x OS
1
))/(OS
O
x SP
1
)
where,
|
|
|
|
|
CR
O
|
|
=
|
|
the Conversion Rate in effect on the Expiration Date
|
CR
1
|
|
=
|
|
the Conversion Rate in effect on the day next succeeding the Expiration Date
|
AC
|
|
=
|
|
the aggregate value of all cash and any other consideration (as determined by
the Board of Trustees) paid or payable for Common Shares purchased in such
tender or exchange offer
|
OS
O
|
|
=
|
|
the number of Common Shares outstanding immediately prior to the Expiration Time
|
OS
1
|
|
=
|
|
the number of Common Shares outstanding immediately after the date such tender
or exchange offer expires
|
SP
1
|
|
=
|
|
the average of the Closing Sale Prices of Common Shares for the 10 consecutive
Trading Days commencing on the Trading Day next succeeding the Expiration Date
|
If, however, the application of the foregoing formula would result in a decrease in the
Conversion Rate, no adjustment to the Conversion Rate shall be made.
Any adjustment made pursuant to this subsection (vi) shall become effective on the date
immediately prior to the open of business on the day following the Effective Date. If the Trust is
obligated to purchase Common Shares pursuant to any such tender or exchange offer, but the Trust is
permanently prevented by applicable law from effecting any such purchases or all such purchases are
rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate that would be in
effect if such tender or exchange offer had not been made.
(b) If the Trust issues any rights, warrants, options or other securities entitling the
holders thereof to purchase or subscribe for Common Shares or securities convertible into Common
Shares only upon the occurrence of certain triggering events, then:
(i) the Conversion Rate shall not be adjusted pursuant to Section 8(a) above until the
earliest of these triggering events occurs; and
- 14 -
(ii) the Conversion Rate shall be readjusted to the extent any of these rights, options
or warrants are not exercised before they expire.
(c) The Conversion Rate shall not be adjusted for any of the transactions described in Section
8(a) if the Trust makes provisions for each holder of Series C Preferred to participate in the
transaction without conversion as if such holder held the number of shares equal to the Conversion
Rate in effect on the ex-date or effective date, as the case may be, for such transaction
multiplied by the number of Series C Preferred Shares held by such holder.
(d) The Conversion Rate shall not be adjusted pursuant to the provisions above unless the
adjustment would result in a change of at least 1% in the then effective Conversion Rate. Any
adjustment that would otherwise have been made shall be taken into account in any subsequent
adjustment. In addition, at the end of each fiscal year, beginning with the fiscal year ending on
December 31, 2007, any adjustments that have otherwise deferred pursuant to this subsection (d)
shall be given effect, and those adjustments, if any, shall no longer be carried forward or taken
into account in any subsequent adjustment. If a Fundamental Change occurs, all adjustments that
have otherwise deferred pursuant to this subsection (d) shall be given effect.
(e) To the extent permitted by law and the continued listing requirements of the NYSE or any
other securities exchange on which Common Shares may then be listed, the Board of Trustees may,
from time to time, increase the Conversion Rate by any amount for a period of at least 20 days or
any longer period required by law, so long as the increase is irrevocable during that period and
the Board of Trustees determines that the increase is in the Trusts best interests. Any such
determination by the Board of Trustees shall be conclusive. The Trust shall mail a notice of the
increase to holders of Series C Preferred Shares at least 15 days before the day the increase
commences.
(f) The Board of Trustees may from time to time make such additional increases in the
Conversion Rate, in addition to those otherwise required or permitted by this Section 8, if the
Board determines that it is advisable, in order that any dividend or distribution of Common Shares
or other capital shares, any subdivision, reclassification or combination of Common Shares or other
capital shares, or any issuance of options, warrants or other rights to acquire Common Shares or
other capital shares, or any event treated as such for United States federal income tax purposes,
shall not be taxable to the holders of such Common Shares, capital shares, options, warrants or
other right for United States federal income tax purposes or to diminish any such tax. The Trust
shall mail a notice of the increase to holders of Series C Preferred Shares at least 15 days before
the day the increase commences.
(g) Notwithstanding the other provisions of this Section 8, the Conversion Rate shall not be
adjusted:
(i) upon the issuance of any Common Shares pursuant to any present or future plan
providing for the reinvestment of distributions or interest payable on the Trusts
securities and the investment of additional optional amounts in Common Shares under any
plan;
(ii) upon the issuance of any Common Shares or options or rights to purchase Common
Shares pursuant to, or the repurchase by the Trust of Common Shares or such options or
rights pursuant to, any present or future employee, trustee, manager or consultant incentive
or benefit plan or program of or assumed by the Trust or any of the Trusts subsidiaries;
(iii) for a change in the par value of the Common Shares; or
(iv) for accumulated and unpaid distributions.
(h) The following provisions shall apply if a Business Combination shall occur a result of
which the holders of the Trusts Common Shares are entitled to receive stock, other securities,
other property or assets (including cash or any combination thereof) with respect to or in exchange
for Common Shares:
(i) The Trust or the successor or purchasing Person, as the case may be, shall provide
that each holder of Series C Preferred Shares shall be entitled thereafter to convert such
Series C Preferred Shares into the kind and amount of stock, other securities or other
property or assets (including cash or any combination thereof) which such holder of Series C
Preferred Shares would have owned or been entitled to receive upon
- 15 -
such Business Combination as if such holder of Series C Preferred Shares held a number
of Common Shares equal to the Conversion Rate as of the effective date for such Business
Combination, multiplied by the number of shares of Series C Preferred Shares held by such
holder; provided that with respect to a Business Combination that also constitutes a
Fundamental Change, such holder of Series C Preferred Shares shall not be entitled to
receive any Additional Shares if such holder does not convert its Series C Preferred Shares
in connection with the relevant Fundamental Change pursuant to Section 10(a). In the event
that holders of Common Shares have the opportunity to elect the form of consideration to be
received in such Business Combination, the Trust shall make adequate provision whereby the
holders of Series C Preferred Shares shall have a reasonable opportunity to determine the
form of consideration into which all of the Series C Preferred Shares, treated as a single
class, shall be convertible from and after the effective date of such Business Combination.
Such determination shall be based on the weighted average of elections made by the holders
of Series C Preferred Shares who participate in such determination, shall be subject to any
limitations to which all of the holders of Common Shares are subject (such as pro rata
reductions applicable to any portion of the consideration payable in such Business
Combination), and shall be conducted in such a manner as to be completed by the date which
is the earliest of (A) the deadline for elections to be made by holders of Common Shares,
and (B) two Trading Days prior to the anticipated effective date of the Business
Combination.
(ii) The Trust shall provide notice of the opportunity to determine the form of such
consideration, as well as notice of the determination made by the holders of Series C
Preferred Shares (and the weighted average of elections), by posting such notice with DTC
and providing a copy of such notice to the Transfer Agent. If the effective date of a
Business Combination is delayed beyond the initially anticipated effective date, holders of
Series C Preferred Shares shall be given the opportunity to make subsequent similar
determinations in regard to such delayed effective date.
(iii) If this Section 8(h) applies to any event or occurrence would otherwise result in
an adjustment to the Conversion Rate pursuant to this Section 8, such adjustment shall not
occur or apply.
(iv) The above provisions of this Section 8(h) shall similarly apply to successive
Business Combinations. The Trust shall not become a party to any Business Combination to
which this Section 8(h) is applicable unless its terms are consistent in all material
respects with the provisions of this Section 8(h).
(v) None of the provisions of this Section 8(h) shall affect the right of a holder of
Series C Preferred Shares to convert its shares of Series C Preferred Shares into Common
Shares prior to the effective date of a Business Combination.
(i) No adjustment to the Conversion Rate shall be required in connection with any event,
transaction or other occurrence unless these terms of the Series C Preferred Shares specifically
require that such an adjustment be made in connection with such event, transaction or other
occurrence.
(j) All adjustments to the Conversion Rate under this Section 8 or Section 9 or 10 shall be
made by the Trust and shall be calculated to the nearest one ten thousandth (1/10,000) of a share.
Notwithstanding anything in these terms of the Series C Preferred Shares to the contrary, in no
event shall the Conversion Rate be adjusted so that the Conversion Price would be less than $0.01,
subject to adjustment for share splits and combinations, reclassifications and similar events
affecting the Common Shares.
(k) In any case in which this Section 8 provides that an adjustment shall become effective
immediately after (A) a record date for an event, (B) the date fixed for the determination of
shareholders entitled to receive a distribution pursuant to Section 8(a)(i), (C) a date fixed for
the determination of shareholders entitled to receive rights, warrants, options or other securities
pursuant to Section 8(a)(iii) or (D) the Expiration Time for any tender or exchange offer pursuant
to Section 8(a)(vi) (each a
Determination Date
), the Trust may elect to defer until the
occurrence of the applicable Adjustment Event (x) issuing to each holder of Series C Preferred
Shares (or portion thereof) converted after such Determination Date and before the occurrence of
such Adjustment Event, the additional Common Shares or other securities issuable upon such
conversion by reason of the adjustment required by such Adjustment Event over and above the Common
Shares issuable upon such conversion before giving effect to such adjustment and (y) settling
fractional shares in the manner set forth in Section 7(c)(ii); provided that in the case of an
adjustment made pursuant to Section 8(a)(iv) with respect to a distribution of capital shares of,
or similar equity interest in, a subsidiary or other
- 16 -
business unit of the Trust, the Trust may defer the issuance of such additional shares and
cash payment, if any, until the third Business Day immediately following the last day of the 20
consecutive Trading Day period commencing on the fifth Trading Day after the Ex Distribution Date.
For purposes of this Section 8(k), the term
Adjustment Event
shall mean:
(i) in any case referred to in clause (A) hereof, the occurrence of such event;
(ii) in any case referred to in clause (B) hereof, the date any such distribution is
paid or made;
(iii) in any case referred to in clause (C) hereof, the date of expiration of such
rights, warrants, options or other securities (or the conversion period of any convertible
securities issued upon exercise thereof); and
(iv) in any case referred to in clause (D) hereof, the date a sale or exchange of
Common Shares pursuant to such tender or exchange offer is consummated and becomes
irrevocable.
(l) Whenever an adjustment in the Conversion Rate with respect to the Series C Preferred
Shares is required:
(i) the Trust shall forthwith place on file with the Transfer Agent a certificate of
its chief financial officer (or such person having similar responsibilities of the Trust),
stating the adjusted Conversion Rate determined as provided herein and setting forth in
reasonable detail such facts as shall be necessary to show the reason for and the manner of
computing such adjustment; and
(ii) a notice stating that the Conversion Rate has been adjusted and setting forth the
adjusted Conversion Rate shall forthwith be given by the Trust to each holder of Series C
Preferred Shares. Any such notice so given shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice, and any failure to give such notice
or any defect therein shall not affect the legality or validity of any such adjustment.
(m) In case:
(i) the Trust shall declare a distribution or any other distribution on its Common
Shares that would require an adjustment in the Conversion Rate pursuant to Section 8(a); or
(ii) the Trust shall authorize the granting to the holders of all or substantially all
of the Common Shares of rights, warrants, options or other securities to subscribe for or
purchase any share of any class of shares of beneficial interest of the Trust or any other
rights, warrants, options or other securities of the Trust; or
(iii) of any reclassification or reorganization of the Common Shares (other than a
subdivision or combination of the outstanding Common Shares, or a change in par value, or
from par value to no par value, or from no par value to par value), or of any consolidation
or merger to which the Trust is a party and for which approval of any shareholders of the
Trust is required, or of the sale or transfer of all or substantially all of the assets of
the Trust; or
(iv) of the voluntary or involuntary dissolution, liquidation or winding up of the
Trust;
the Trust shall cause to be mailed to each holder of Series C Convertible Shares at its address
appearing in the records of the Trust, as promptly as possible but in any event at least ten (10)
days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a
record is to be taken for the purpose of such, distribution or grant, or, if a record is not to be
taken, the date as of which the holders of Common Shares of record to be entitled to such,
distribution or grant are to be determined, or (B) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become
effective or occur, and the date as of which it is expected that holders of Common Shares of record
shall be entitled to exchange their Common Shares for securities or
- 17 -
other property deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. In the event any of the foregoing events described in
clause (i) through (iv) above is a Make-Whole Fundamental Change, this notice pursuant to this
Section 8(m) may be combined with the notice to be provided pursuant to Section 9(c) below. Failure
to give a notice pursuant to this Section 8(m), or any defect therein, shall not affect the
legality or validity of such dividend, distribution, grant, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up.
9.
Adjustment to Conversion Rate Upon a Fundamental Change
(a) If and only to the extent a holder of Series C Preferred Shares elects to convert its
Series C Preferred Shares pursuant to Section 8(a) in connection with a Make-Whole Fundamental
Change, the Trust shall increase the Conversion Rate applicable to the shares of Series C Preferred
Shares surrendered for conversion by a number of additional shares (the
Additional Shares
), if
any, as set forth in this Section 9. A conversion shall be deemed for the purposes of this Section
9(a) to be in connection with a Fundamental Change if the applicable Conversion Notice is
received by the Transfer Agent from and including the Effective Date of such Fundamental Change up
to and including the Fundamental Change Conversion Date for that Fundamental Change. If a holder
elects to convert Series C Preferred Shares in connection with a Fundamental Change, but such
Fundamental Change is not consummated, then such holder shall not be entitled to the increased
Conversion Rate referred to above in connection with the conversion.
The number of Additional Shares, if any, shall be determined by reference to the table below, based
on the Effective Date of such Fundamental Change and the Share Price for such Fundamental Change.
If an event occurs that requires an adjustment to the Conversion Rate as described in Section 8,
each applicable Share Price set forth in the first column of the table below shall be adjusted,
concurrently with such adjustment in the Conversion Rate, multiplying the Share Price in effect
immediately before the adjustment by a fraction, the numerator of which is the Conversion Rate in
effect immediately before the adjustment, and the denominator of which is the adjusted Conversion
Rate. In addition, but without duplication of the adjustment pursuant to the preceding sentence, if
an event occurs that requires an adjustment to the Conversion Rate as described in Section 8, each
applicable number of Additional Shares set forth in the table below shall be adjusted concurrently
and in the same manner in which the Conversion Rate is adjusted as described in Section 8.
- 18 -
Number of Additional Shares
(per $25.00 liquidation preference of Series C Preferred Shares)
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Share Price
|
Effective Date
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$59.45
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$65.00
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$70.00
|
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$75.00
|
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$80.00
|
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$85.00
|
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$90.00
|
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$95.00
|
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$100.00
|
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$110.00
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$120.00
|
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$130.00
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December 22, 2006
|
|
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0.0701
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|
|
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0.0562
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|
|
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0.0461
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|
|
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0.0379
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|
|
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0.0313
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|
|
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0.0262
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|
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0.0221
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|
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0.0190
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0.0165
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0.0130
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|
|
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0.0106
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0.0091
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January 15, 2008
|
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0.0701
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|
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0.0582
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|
|
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0.0475
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0.0388
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|
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0.0318
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0.0263
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0.0220
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|
|
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0.0187
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0.0161
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0.0125
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|
|
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0.0102
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|
|
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0.0088
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January 15, 2009
|
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0.0701
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0.0571
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|
|
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0.0460
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0.0369
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|
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0.0296
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|
|
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0.0238
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|
|
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0.0193
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|
|
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0.0159
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|
|
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0.0133
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|
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0.0100
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|
|
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0.0080
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|
|
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0.0068
|
|
January 15, 2010
|
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0.0701
|
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|
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0.0561
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|
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0.0446
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|
|
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0.0351
|
|
|
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0.0272
|
|
|
|
0.0210
|
|
|
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0.0163
|
|
|
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0.0127
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|
|
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0.0102
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|
|
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0.0071
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|
|
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0.0055
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|
|
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0.0046
|
|
January 15, 2011
|
|
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0.0701
|
|
|
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0.0554
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|
|
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0.0436
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0.0335
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0.0250
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|
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0.0180
|
|
|
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0.0127
|
|
|
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0.0088
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|
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0.0063
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0.0037
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0.0028
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0.0024
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January 15, 2012
|
|
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0.0701
|
|
|
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0.0550
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|
|
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0.0432
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|
|
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0.0329
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|
|
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0.0238
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|
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0.0157
|
|
|
|
0.0084
|
|
|
|
0.0022
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
January 15, 2013
|
|
|
0.0701
|
|
|
|
0.0547
|
|
|
|
0.0429
|
|
|
|
0.0327
|
|
|
|
0.0236
|
|
|
|
0.0156
|
|
|
|
0.0083
|
|
|
|
0.0022
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
January 15, 2014
|
|
|
0.0701
|
|
|
|
0.0544
|
|
|
|
0.0426
|
|
|
|
0.0324
|
|
|
|
0.0234
|
|
|
|
0.0154
|
|
|
|
0.0082
|
|
|
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0.0022
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
January 15, 2015
|
|
|
0.0701
|
|
|
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0.0541
|
|
|
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0.0424
|
|
|
|
0.0322
|
|
|
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0.0232
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|
|
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0.0153
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|
|
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0.0081
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|
|
|
0.0021
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|
|
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0.0000
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|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
January 15, 2016
|
|
|
0.0701
|
|
|
|
0.0540
|
|
|
|
0.0423
|
|
|
|
0.0321
|
|
|
|
0.0231
|
|
|
|
0.0152
|
|
|
|
0.0081
|
|
|
|
0.0021
|
|
|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
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|
0.0000
|
|
January 15, 2017
|
|
|
0.0701
|
|
|
|
0.0342
|
|
|
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0.0067
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|
|
0.0000
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|
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0.0000
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|
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0.0000
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|
|
0.0000
|
|
|
|
0.0000
|
|
|
|
0.0000
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|
|
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0.0000
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0.0000
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0.0000
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(b) The exact applicable Share Price and Effective Date may not be as set forth in the
table above, in which case:
(i) if the actual applicable Share Price is between two applicable Share Price listed
in the table above, or the actual effective date is between two dates listed in the table
above, the Trust shall determine the number of additional shares by linear interpolation
between the numbers of additional shares set forth for the two applicable prices, or for the
two dates based on a 365-day year, as applicable;
(ii) if the actual applicable Share Price is greater than $130.00 per share (subject to
adjustment as provided below, the
Cap Price
), no Additional Shares shall be issuable and
the Conversion Rate shall not increase in connection with a Fundamental Change; and
(iii) if the actual applicable Share Price is less than $59.45 per share (subject to
adjustment as provided below, the
Floor Price
), no Additional Shares shall be issuable and
the Conversion Rate shall not increase in connection with a Fundamental Change.
In no event shall Additional Shares be issuable if, after giving effect thereto, the Conversion
Rate would exceed 0.4205 (the
Cap Conversion Rate
). If an event occurs that requires an
adjustment to the Conversion Rate as described in Section 8, each of the Cap Price, the Floor Price
and the Cap Conversion Rate shall be adjusted concurrently and in the same manner in which the
Conversion Rate is adjusted as described in Section 8.
(c) The Trust shall mail to holders of Series C Preferred Shares notice of, or publicly
announce (with subsequent prompt notice by mail), the anticipated effective date of any proposed
Make-Whole Fundamental Change at least 15 days before the anticipated Effective Date of such
Make-Whole Fundamental Change. In addition, no later than the third Business Day after the
completion of such Make-Whole Fundamental Change, the Trust shall publicly announce such
completion.
10.
Fundamental Change Conversion Right and Repurchase Right
.
(a) Subject to and upon compliance with the provisions of this Section 10, in the event of a
Fundamental Change occurs, when the applicable Share Price is less than $59.45 per share, then a
holder of any share or shares of Series C Preferred Shares shall have the right, at its option and
in addition to its Holder Conversion Right, to convert all or any portion of such holders
outstanding Series C Preferred Shares (the
Fundamental Change Conversion Right
) on the applicable
Fundamental Change Conversion Date into the number of fully paid and non-assessable Common Shares
per $25.00 liquidation preference of Series C Preferred Shares equal to such liquidation preference
plus accrued and unpaid dividends to but not including such Fundamental Change Conversion Date
divided by 98% of
- 19 -
the Market Price of Common Shares (such rate of conversion being the
Fundamental Change
Conversion Rate
). The Fundamental Change Conversion Right shall be exercisable as provided below
in this Section 10.
(b) If the Fundamental Change Conversion Right has been exercised with respect to Series C
Preferred Shares, the Trust shall have the right (the
Repurchase Right
), at its election and in
lieu of such conversion, to repurchase some or all of such Series C Preferred Shares for a
repurchase price per share equal to the $25.00 liquidation preference of such Series C Preferred
Share plus accrued and unpaid dividends to, but not including, such Fundamental Change Conversion
Date (the
Fundamental Change Repurchase Price
); provided that if the relevant Fundamental Change
Conversion Date is on a date that is after a Distribution Record Date and on or prior to the
corresponding Distribution Payment Date, the Trust shall pay such distributions to the holder of
record on the corresponding Distribution Record Date, and the Fundamental Change Repurchase Price
per Series C Preferred Share shall be equal to the $25.00 liquidation preference of such Series C
Preferred Share. The Repurchase Right shall be exercisable by notice from the Trust to holders of
Series C Preferred Shares and to the Transfer Agent given not later than the time and in the manner
provided in Section 10(e) and may be incorporated as a part of the notice delivered pursuant to
such Section.
(c) In the event the Trust exercises the Repurchase Right with respect to Series C Preferred
Shares that would otherwise be converted into Common Shares on a Fundamental Change Conversion
Date, such Series C Preferred Shares shall not be converted into Common Shares, and the holder of
such Series C Preferred Shares shall be entitled to receive the applicable Fundamental Change
Repurchase Price in cash as provided in this Section 10.
(d) Notwithstanding the provisions of Section 10(a), but subject to the next sentence, the
aggregate number of Common Shares issuable in connection with the exercise of the Fundamental
Change Conversion Right may not exceed 3,244,023 shares (if 5,400,000 Series C Preferred Shares are
issued under these Articles Supplementary), or 3,604,470 (if more than 5,400,000 Series C Preferred
Shares are issued under these Articles Supplementary), or such other number of Common Shares as
shall then be authorized and available for issuance. If the number of Common Shares issuable upon
such conversion would exceed the foregoing amounts or such other number of Common Shares as shall
then be authorized and available for issuance, the Trust shall have the option to satisfy the
remainder of such conversion in common shares that are authorized for issuance in the future. The
Trust shall use its best efforts to have any such additional number of Common Shares authorized for
issuance within 180 days of the Fundamental Change Conversion Date.
(e) Within 15 Business Days after the occurrence of a Fundamental Change, the Trust shall mail
to the Transfer Agent and all holders of Series C Preferred Shares, and to beneficial owners as
required by applicable law, a notice regarding the Fundamental Change and of the resulting
Repurchase Right. The notice shall state, among other things:
(i) the events constituting the Fundamental Change;
(ii) the Effective Date of the Fundamental Change;
(iii) the last date on which a holder of Series C Preferred Shares may exercise the
Fundamental Change Conversion Right;
(iv) to the extent applicable, the Fundamental Change Conversion Rate and the
Fundamental Change Conversion Price;
(v) whether the Trust has exercised the Repurchase Right with respect to some or all of
Series C Preferred Shares as to which the Fundamental Change Conversion Right may be
exercised and, if less than all of such Series C Preferred Shares, specifying the percentage
which the Trust has elected to repurchase;
(vi) unless the Trust has exercised the Repurchase Right with respect to all Series C
Preferred Shares as to which the Fundamental Change Conversion Right applies, the method of
calculating the Market Price of Common Shares;
- 20 -
(vii) the Fundamental Change Conversion Date;
(viii) the name and address of the applicable Transfer Agent;
(ix) the Conversion Rate and any adjustments to the Conversion Rate that will result
from the Fundamental Change;
(x) that Series C Preferred Shares with respect to which the Fundamental Change
Conversion Right has been exercised may be converted at the applicable Conversion Rate, if
otherwise convertible, only if a notice of the exercise of the Fundamental Change Conversion
Right has been properly withdrawn;
(xi) that the holder of Series C Preferred Shares shall have the right to withdraw
notice of the exercise of the Fundamental Change Conversion Right as to any Series C
Preferred Shares prior to the close of business on the Business Day immediately preceding
the Fundamental Change Conversion Date (or any such time as may be required by applicable
law);
(xii) the CUSIP number or numbers assigned to the Series C Preferred Shares (if then
generally in use);
(xiii) briefly, the other conversion rights of the Series C Preferred Shares and
whether, at the time of such notice, the Series C Preferred Shares are eligible for
conversion thereunder; and
(xiv) unless the Trust has elected to repurchase all Series C Preferred Shares as to
which the Fundamental Change Conversion Right applies, the procedures that holders must
follow to exercise of the Fundamental Change Conversion Right.
The Trust shall issue a press release for publication to the Dow Jones & Company, Inc., Business
Wire or Bloomberg Business News (or, if such organizations are not in existence at the time of
issuance of such press release, such other news or press organization as is reasonably calculated
to broadly disseminate the relevant information to the public) prior to the opening of business on
the first Trading Day following any date on which the Trust provides such notice to the holders of
Series C Preferred Shares. No failure of the Trust to give the foregoing notices and no defect
therein shall limit the conversion rights of holders of Series C Preferred Shares or affect the
validity of the proceedings for conversion or repurchase of the Series C Preferred Shares pursuant
to this Section 10.
(f) In order to exercise the Fundamental Change Conversion Right a holder of Series C
Preferred Shares must surrender to the Trust at its principal office or at the office of the
Transfer Agent, as may be designated by the Board of Trustees, the certificate or certificates, if
any, for the Series C Preferred Shares to be converted accompanied by a written notice specifying
the name or names in which the holder wishes the certificate or certificates for the Common Shares,
if any, to be issued or in which ownership of such Common Shares, if uncertificated, are to be
registered, and stating:
(i) the relevant Fundamental Change Conversion Date;
(ii) that the holder of Series C Preferred Shares elects to convert all or a specified
whole number of those shares pursuant to the Fundamental Change Conversion Right; and
(iii) that the Series C Preferred Shares are to be converted pursuant to the
Fundamental Change Conversion Right provisions of Series C Preferred Shares.
In lieu of the foregoing procedure, to the extent Series C Preferred Shares are held by DTC in
global form, the beneficial owner of Series C Preferred Shares shall comply with the procedures of
DTC in order to convert the owners beneficial interest in such Series C Preferred Shares pursuant
to the Fundamental Change Conversion Right on or before the close of business on the Fundamental
Change Conversion Date.
- 21 -
(g) A holder may withdraw any notice of its exercise of its Fundamental Change Conversion
Right (in whole or in part) by delivering to the Transfer Agent a written notice of withdrawal
prior to the close of business on the Business Day immediately preceding the Fundamental Change
Conversion Date. The notice shall identify the name of the holder, indicate that the holder is
withdrawing its election to exercise its Fundamental Change Conversion Right and must state:
(i) the number of Series C Preferred Shares being withdrawn;
(ii) if certificated shares have been issued, the certificate numbers of the Series C
Preferred Shares being withdrawn; and
(iii) the number, if any, of the Series C Preferred Shares that remain subject to the
conversion notice.
In lieu of the foregoing procedure, to the extent Series C Preferred Shares are held by DTC in
global form, the beneficial owner of Series C Preferred Shares shall comply with the procedures of
DTC in order to withdraw notice of exercise of its Fundamental Change Conversion Right with respect
to such owners beneficial interest in such Series C Preferred Shares on or before the close of
business on the Business Day immediately preceding the Fundamental Change Conversion Date.
(h) As promptly as practicable following the Fundamental Change Conversion Date and the
surrender of the certificate or certificates, if any, for Series C Preferred Shares to be converted
on such date pursuant to the Fundamental Change Conversion Right and receipt of the notice in
accordance with Section 10(f), and, if Common Shares to be issued upon conversion of such Series C
Preferred Shares are to be registered in a name other than the name of the holder of such Series C
Preferred Shares payment of all required transfer taxes, if any, or the demonstration to the
Trusts satisfaction that those taxes have been paid, unless the Trust shall have exercised the
Repurchase Right with respect to such Series C Preferred Shares, (i) if converted on such date
pursuant to the Fundamental Change Conversion Right and receipt of the notice in accordance with
Section 10(f), and, if Common Shares to be issued upon conversion of such Series C Preferred Shares
are to be registered in a name other than the name of the holder of such Series C Preferred Shares
payment of all required transfer taxes, if any, or the demonstration to the Trusts satisfaction
that those taxes have been paid, unless the Trust shall have exercised the Repurchase Right with
respect to such Series C Preferred Shares, (i) if Common Shares to be issued upon such conversion
are certificated, the Trust shall issue and shall deliver or cause to be issued and delivered to
such holder, or to such other Person on such holders written order (A) certificates evidencing the
number of validly issued, fully paid and non-assessable full Common Shares to which the holder of
the shares of Series C Preferred Shares being converted, or the holders transferee, shall be
entitled, and (B) if less than the full number of such Series C Preferred Shares are being
converted, if the Series C Preferred Shares are certificated, a new certificate or certificates, of
like tenor, for the number of Series C Preferred Shares evidenced by the surrendered certificate or
certificates, less the number of shares being converted (or otherwise the Trust shall cause the
number of Series C Preferred Shares not being converted to remain registered in the name of such
holder), or (ii) if Common Shares to be issued upon such conversion are not certificated, (A) the
Trust shall cause the number of validly issued, fully paid and non-assessable full Common Shares to
which a holder of shares of Series C Preferred Shares being converted, or a holders transferee,
shall be entitled to be registered in the name of such holder or such transferee, as applicable,
and (B) if less than the full number of such Series C Preferred Shares are being converted, if the
Series C Preferred Shares are certificated, a new certificate or certificates, of like tenor, for
the number of Series C Preferred Shares evidenced by the surrendered certificate or certificates,
less the number of shares being converted (or otherwise the Trust shall cause the number of Series
C Preferred Shares not being converted to remain registered in the name of such holder), and (C) if
a fractional interest in respect of a Common Share arising upon such conversion is to be settled in
cash as provided in Section 10(l), a check or other transfer of funds for the cash settlement
amount.
(i) A conversion of Series C Preferred Shares pursuant to the Fundamental Change Conversion
Right which has been properly exercised and for which the notice of exercise has not been withdrawn
shall be deemed to have been made at the close of business on the Fundamental Change Conversion
Date, unless the Repurchase Right has been exercised with respect to such Series C Preferred
Shares, and at such time the rights of the holder thereof as to the Series C Preferred Shares being
converted shall cease except for the right to receive Common Shares and, if applicable,
- 22 -
cash in lieu of fractional Common Shares issuable upon such conversion, and the Person
entitled to receive Common Shares shall be treated for all purposes as having become the record
holder of those Common Shares at that time.
(j) If the Trust elected to repurchase Series C Preferred Shares subject to the exercise of a
Fundamental Change Conversion Right, the Fundamental Change Conversion Right of the holder of such
Series C Preferred Shares shall automatically not be exercisable, but the holder shall be entitled
to receive the Fundamental Change Repurchase Price as provided below in this Section 10.
(k) The holder of any Series C Preferred Share which the Trust has elected to repurchase
pursuant to the Repurchase Right and as to which the notice of exercise of the Fundamental Change
Conversion right has not been properly withdrawn shall be entitled to payment of the Fundamental
Change Repurchase Price from the Trust promptly following the later of (i) the Fundamental Change
Conversion Date with respect to such Series C Preferred Shares and (ii) the time of book-entry
transfer or delivery of such Series C Preferred Shares to the Transfer Agent. If the Transfer Agent
holds cash sufficient to pay the Fundamental Change Repurchase Price of the Series C Preferred
Shares on the Business Day following the Fundamental Change Conversion Date, then:
(i) the Series C Preferred Shares shall cease to be outstanding and distributions shall
cease to accrue (whether or not book-entry transfer of the Series C Preferred Shares is made
or whether or not the Series C Preferred Shares Certificate is delivered to the Transfer
Agent); and
(ii) all of the other rights of the holders of Series C Preferred Shares shall
terminate (other than the right to receive the Fundamental Change Repurchase Price upon
delivery or transfer of the Series C Preferred Shares).
(l) In connection with the conversion of any Series C Preferred Shares pursuant to the
Fundamental Change Conversion Right, the Trust may elect not to issue fractional Common Shares, in
which case the Trust shall pay a cash adjustment in respect of any fractional interest in an amount
equal to the fractional interest, multiplied by the Closing Sale Price of the Common Shares on the
Trading Day immediately prior to the Fundamental Change Conversion Date.
(m) In case the notice of exercise of the Fundamental Change Conversion Right specifies that
the Common Shares issuable upon conversion of Series C Preferred Shares are to be issued or
registered in a name or names other than that of the registered holder of Series C Preferred
Shares, the notice of exercise shall be accompanied by payment of all transfer taxes payable upon
the issuance of Common Shares in that name or names. Other than those transfer taxes payable
pursuant to the preceding sentence, the Trust shall pay any documentary, stamp or similar issue or
transfer taxes that may be payable in respect of any issuance or delivery of Common Shares upon
conversion of Series C Preferred Shares pursuant to the Fundamental Change Conversion Right.
(n) A holder of Series C Preferred Shares being converted pursuant to the Fundamental Change
Conversion Right is not entitled to any rights of a holder of Common Shares, and only to the extent
such Series C Preferred Shares have been or are deemed to have been converted to Common Shares in
accordance with the provisions of this Section 10.
(o) All Common Shares delivered upon conversion of shares of Series C Preferred pursuant to
the Fundamental Change Conversion Right shall be duly authorized, validly issued, fully paid and
nonassessable, and shall be free from preemptive rights and free of any lien or adverse claim.
(p) The Trust shall comply with the provisions of all United States Federal and state
securities laws in connection with any exercise of the Repurchase Right.
11.
Status of Redeemed, Reacquired and Converted Series C Preferred Shares
. In the
event any Series C Preferred Shares shall be redeemed pursuant to Section 5 hereof, repurchased
pursuant to Section 10 hereof or otherwise reacquired by the Trust or converted pursuant to Section
7 or 10 hereof, the Shares so redeemed, repurchased, reacquired or converted shall become
authorized but unissued Preferred Shares, available for future
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classification, reclassification and issuance by the Trust or, if so determined by the
Trustees, may be retired and canceled by the Trust.
12.
Restrictions on Ownership
.
The Series C Preferred Shares shall be subject to the ownership restrictions and other
provisions contained in Article NINTH of the Declaration.
13.
Severability
. If any preference, right, voting power, restriction, limitation as
to dividends or other distributions, qualification, term or condition of redemption or other term
of the Series C Preferred Shares is invalid, unlawful or incapable of being enforced by reason of
any rule of law or public policy, then, to the extent permitted by law, all other preferences,
rights, voting powers, restrictions, limitations as to dividends or other distributions,
qualifications, terms and conditions of redemption and other terms of the Series C Preferred Shares
which can be given effect without the invalid, unlawful or unenforceable preference, right, voting
power, restriction, limitation as to dividends or other distributions, qualification, term or
condition of redemption or other term of the Series C Preferred Shares shall remain in full force
and effect and shall not be deemed dependent upon any invalid, unlawful or unenforceable
preference, right, voting power, restriction, limitation as to dividends or other distributions,
qualification, term or condition of redemption or other term of the Series C Preferred Shares.
14.
Notices to Holders
. Unless otherwise provided herein or required by law, notices
to holders of Series C Preferred Shares provided for in these Articles Supplementary shall be
mailed to such holders by first class mail, postage pre-paid, at the respective addresses as the
same shall appear on the share transfer records of the Trust or the Transfer Agent. Unless
otherwise provided herein or required by law, requirements set forth in these Articles
Supplementary for public announcements or publications by the Trust may be satisfied if the subject
matter thereof is contained in (a) a document filed by the Trust with, or furnished by the Trust
to, the Securities and Exchange Commission and such filing is available to be viewed by the public
on the Securities and Exchange Commissions EDGAR system (or any successor system thereto) or (b) a
press release submitted by the Trust for publication to Dow Jones & Company, Inc., Business Wire or
Bloomberg Business News (or, if such organizations are not in existence at the time of issuance of
such press release, such other news or press organization as is reasonably calculated to broadly
disseminate the relevant information to the public).
15.
Certain Definitions
. As used in this ARTICLE SECOND, the following terms shall
have the following respective meanings:
Additional Shares
has the meaning set forth in Section 9(a).
Adjustment Event
has the meaning set forth in Section 8(k).
Business Combination
means:
(i) any recapitalization, reclassification or change of Common Shares, other than a
change in par value, or from par value to no par value, or from no par value to par value,
or as a result of subdivision or a combination;
(ii) a consolidation, merger or combination of the Trust with another Person;
(iii) a sale, conveyance or lease to another Person of all or substantially all of the
Trusts property and assets (other than to one or more of the Trusts subsidiaries); or
(iv) a statutory share exchange.
Business Day
means any day, other than a Saturday or Sunday, that is neither a legal holiday
nor a day on which banking institutions in New York, New York or Kansas City, Missouri are
authorized or required by law, regulation or executive order to close.
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Cap Conversion Rate
has the meaning set forth in Section 9(b).
Cap Price
has the meaning set forth in Section 9(b)(ii).
Cash Settlement Averaging Period
means the 20 consecutive Trading Days (including the last
Trading Day of such period), starting on, and including the third Trading Day following the Company
Conversion Date or the Conversion Date, as the case may be.
Change in Control
means the occurrence of any of the following:
(i) any person or group (as those terms are used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the beneficial owner (as that term is used in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 50% or more of the total outstanding voting
power of all classes of the Trusts shares of beneficial interest entitled to vote generally
in the election of Trustees (the voting share);
(ii) there occurs a sale, transfer, lease, conveyance or other disposition of all or
substantially all of the Trusts property or assets, or of all or substantially all of the
property or assets of the Trust and its subsidiaries on a consolidated basis, to any
person or group (as those terms are used in Sections 13(d) and 14(d) of the Exchange
Act), including any group acting for the purpose of acquiring, holding, voting or disposing
of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act;
(iii) the Trust consolidates with, or merges with or into, another Person or any Person
consolidates with, or merges with or into, the Trust, unless the Persons that beneficially
owned, directly or indirectly, the Trusts voting share immediately prior to such
consolidation or merger beneficially owned, directly or indirectly, immediately after such
consolidation or merger, voting shares of the surviving or continuing entities representing
at least a majority of the total outstanding voting shares of all outstanding classes of
voting shares of the surviving or continuing entity;
(iv) the following persons cease for any reason to constitute a majority of the Board
of Trustees:
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(A)
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individuals who on the Original Issue Date constituted the
Board of Trustees; and
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(B)
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any new Trustees whose election to the Board of Trustees or
whose nomination for election by the Trusts shareholders was approved by at
least a majority of the Trusts Trustees then still in office either who were
Trustees on the Original Issue Date or whose election or nomination for
election was previously so approved; or
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(v) the Trust is liquidated or dissolved or holders of the Trusts shares of beneficial
interest approve any plan or proposal for the Trusts liquidation or dissolution.
Notwithstanding the foregoing, a transaction described in (ii) or (iii) above will not constitute a
Change of Control if at least 90% of the consideration (other than cash payments for fractional
shares or pursuant to statutory appraisal rights) in such transaction consists of common shares and
any associated rights traded on a United States national securities exchange (or which will be
traded when issued or exchanged in connection with such transaction).
Closing Sale Price
means with regard to the Common Shares or other capital shares of
beneficial interest on any date, the closing sale price per share (or, if no closing sale price is
reported, the average of the bid and asked prices or, if more than one in either case, the average
of the average bid and the average asked prices) on such date as reported by the NYSE or, if the
Common Shares or other capital shares of beneficial interest, as the case may be, is not reported
by the NYSE, in composite transactions for the principal other U.S. national or regional securities
exchange on which the Common Shares or such capital shares of beneficial interest is traded. If the
Common Shares or such capital shares of beneficial interest are not listed for trading on a U.S.
national or regional securities exchange on the relevant date, the Closing Sale Price will be the
last quoted bid price for the Common Shares or such capital shares of beneficial interest in the
over-the-counter market on the relevant date as reported by the National Quotation Bureau
Incorporated or similar organization. If the Common Shares or such capital shares of beneficial
interest are not so quoted, the
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Closing Sale Price will be the average of the mid-point of the last bid and asked prices for
the Common Shares or such capital shares of beneficial interest on the relevant date from each of
at least three independent nationally recognized investment banking firms selected by the Trust for
this purpose.
Company Conversion Option
has the meaning set forth in Section 7(b)(i).
Company Conversion Option Date
has the meaning set forth in Section 7(b)(iii).
Company Conversion Option Notice
has the meaning set forth in 7(b)(iii).
Conversion Date
has the meaning set forth in Section 7(a)(v).
Conversion Notice
has the meaning set forth in Section 7(a)(ii).
Conversion Price
has the meaning set forth in Section 7(a)(i).
Conversion Rate
has the meaning set forth in Section 7(a)(i).
Conversion Value
means, for each Series C Preferred Share to be converted, an amount equal
to the then applicable Conversion Rate multiplied by the average of the Closing Sale Price during
the Cash Settlement Averaging Period.
Distributed Assets
has the meaning set forth in Section 8(a)(iv).
Distribution Threshold
has the meaning set forth in Section 8(a)(v).
Distribution Payment Date
has the meaning set forth in Section 3(a).
Distribution Rate
has the meaning set forth in Section 3(a).
Distribution Record Date
has the meaning set forth in Section 3(a).
DTC
means The Depository Trust Company or a successor thereto or other similar depositary
holding Series C Preferred Shares in global form.
Effective Date
means, with respect to a Fundamental Change, the date on which such
Fundamental Change occurs or becomes effective.
Exchange Act
means the Securities Exchange Act of 1934, as amended.
Expiration Date
has the meaning set forth in Section 8(a)(vi).
Expiration Time
has the meaning set forth in Section 8(a)(vi).
Floor Price
has the meaning set forth in Section 9(b)(iii).
Fundamental Change
means the occurrence of a Change in Control or a Termination of Trading.
Fundamental Change Conversion Date
means, with respect to a Fundamental Change, the date
specified as such by the Trust in its notice of such Fundamental Change delivered pursuant to
Section 10(e), which date shall be a Business Day and shall not be less than 20 days nor more than
35 days after the date on which the Trust gives such notice.
Fundamental Change Conversion Rate
has the meaning set forth in Section 10(a).
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Fundamental Change Conversion Right
has the meaning set forth in Section 10(a).
Fundamental Change Repurchase Price
has the meaning set forth in Section 10(b).
Holder Conversion Right
has the meaning set forth in Section 7(a)(i).
NYSE
means the New York Stock Exchange or any successor thereto.
Make-Whole Fundamental Change
means a Fundamental Change having an Effective Date on or
prior to January 15, 2017.
Market Price
means, with respect to any Fundamental Change Conversion Date, the average of
the Closing Sale Prices of the Common Shares for the five (5) consecutive Trading Days ending on
the third Trading Day prior to the Fundamental Change Conversion Date, appropriately adjusted to
take into account the occurrence, during the period commencing on the first Trading Day of such
five Trading-Day period and ending on the Fundamental Change Conversion Date, of any event
described in Section 8; provided that in no event shall the Market Price be less than $0.01,
subject to adjustment for share splits and combinations, reclassification and similar events.
Original Issue Date
has the meaning set forth in Section 3(a).
REIT
means a real estate investment trust as defined in the Internal Revenue Code.
Repurchase Right
has the meaning set forth in Section 10(b).
Series A Preferred Shares
has the meaning set forth in Section 2.
Series B Preferred Shares
has the meaning set forth in Section 2.
Series C Preferred Shares
has the meaning set forth in Section 1.
Share Price
means, with respect to a Fundamental Change, an amount determined as follows:
(vi) if the Fundamental Change is a transaction or series of related transactions and
the consideration (excluding cash payments for fractional shares or pursuant to statutory
appraisal rights) for Common Shares in the Fundamental Change consists solely of cash, then
the Share Price will be the cash amount paid per Common Share in the transaction;
(vii) if the Fundamental Change is a sale, transfer, lease, conveyance or other
disposition of property and assets and the consideration paid for the Trusts property and
assets (or for the property and assets of the Trust and its subsidiaries on a consolidated
basis) consists solely of cash, then the Share Price will be the cash amount paid for the
Trusts property and assets, expressed as an amount per Common Share outstanding on the
Effective Date of such Fundamental Change; and
(viii) in all other cases, the Share Price will be the average of the Closing Sale
Price per Common Share for the five consecutive Trading Days immediately preceding the
Effective Date.
Termination of Trading
is deemed to occur if the Trusts Common Shares (or other equity
securities into which the Series C Preferred Shares are then convertible) are neither listed for
trading on a United States national securities exchange nor approved for trading on an established
automated over-the-counter trading market in the United States.
Trading Day
is any day during which (i) trading in the Trusts Common Shares generally
occurs, and (ii) there is no market disruption event. For purposes of this definition, market
disruption event means the occurrence or existence during the one-half hour period ending on the
scheduled close of trading on the principal U.S. national or regional securities exchange on which
the Common Shares are listed for trading of any material suspension or
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limitation imposed on trading (by reason of movements in price exceeding limits permitted by
the stock exchange or otherwise) in the Common Shares or in any options contracts or future
contracts relating to the Common Shares.
Transfer Agent
means, initially, UMB Bank, n.a., as transfer agent for the Series C
Preferred Shares or, with respect to all or any particular function of the Transfer Agent in these
Articles Supplementary, such other conversion, paying or other agent which the Trust shall have
designated by notice given to the holders of Series C Preferred Shares, specifying the name and
address of such agent. The Trust may, in its sole discretion, remove any Transfer Agent with 10
days prior notice to the Transfer Agent; provided, that the Trust shall appoint a successor
Transfer Agent who shall accept such appointment prior to the effectiveness or such removal.
THIRD
: The Series C Preferred Shares have been classified and designated by the Board of
Trustees under the authority contained in the Declaration.
FOURTH
: These Articles Supplementary have been approved by the Board of Trustees or an
authorized committee thereof in the manner and by the vote required by law.
FIFTH
: The undersigned President of the Trust acknowledges these Articles Supplementary to be
the trust act of the Trust and, as to all matters or facts required to be verified under oath, the
undersigned President acknowledges that, to the best of his knowledge, information and belief,
these matters and facts are true in all material respects and this statement is made under the
penalties for perjury.
IN WITNESS WHEREOF, ENTERTAINMENT PROPERTIES TRUST has executed these Articles Supplementary
as of this 21
st
day of December, 2006.
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ENTERTAINMENT PROPERTIES TRUST
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By:
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/s/ David M. Brain
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Name:
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David M. Brain
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Title:
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President
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WITNESS:
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By:
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/s/ Gregory K. Silvers
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Name:
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Gregory K. Silvers
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Title:
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Vice-President and Secretary
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